Schaeffer's Street Chatter Highlights the Following Stocks: Pfizer, Starbucks, and Maxtor.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Pfizer (NYSE:PFE), Starbucks (NASDAQ:SBUX), and Maxtor (NYSE:MXO). "Street Chatter" is a report that analyzes three newsworthy stocks that are generating a lot of attention on Internet message boards. "Street Chatter" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Street Chatter:

Pfizer

Earlier today, Pfizer (NYSE:PFE) announced that it had filed an application with the Food and Drug Administration (FDA) for cancer medication Sutent. PFE also noted that Sutent has fast-track status with the FDA. Apparently, this development was expected by many traders on the Street. While the news prompted a spike of interest on the message boards, the shares have barely budged on the session.

Technically speaking, PFE has plummeted 29 percent under its 10-week and 20-week trendlines since April 2004. However, there is some hope of support for the shares, as their 160-month moving average is rising into the area. But the shares appear to be headed for a squeeze in the near term, as resistance at their 40-month trendline is quickly descending into the area.

Click the following link to see a Monthly Chart of PFE since February 2002 with 40-Month and 160-Month Moving Averages: www.schaeffersresearch.com/commentary/observations.aspx?ID=13857 .

On a relative-strength basis, the equity has underperformed its peers in the AMEX Pharmaceutical Index (DRG) and the Dow Jones Industrial Average (DJIA) since April 2004. Making matters even worse, both the DRG and the DJIA have been outdone by the broader market (as represented by the S&P 500 Index (SPX)), with the DGR falling since April 2005, while the DJIA has been troubled since December 2003.

A look at options activity reveals a rather interesting situation for PFE. Peak call open interest for the front three months currently lies at the 27.50 strike and numbers more than 252,000 contracts, while peak put open interest for the same period resides at the 25 strike with open interest of more than 234,000. Referring back to the monthly chart above, the shares have been trapped in the range for the past several months, with resistance at 27.50 and support at 25. While these levels could hold for some time, prompting PFE to trend sideways, a breakout to either side could be the precursor to a rather sizeable move.

Speaking of a sizeable move, the security's sentiment indicators would suggest that such a move favors a downside break. Short sellers currently maintain an air of complacency, as the stock's short-interest ratio arrives at a paltry 1.51 days to cover, indicating that there is little sideline money to spark any short-covering rally. Meanwhile, Wall Street is enamored of this blue-chip pharmaceutical, as Zacks reports that 15 of the 23 covering analysts rate the shares a "buy" or better. With no "sells" to be found, there is a better chance of PFE receiving a downgrade than an upgrade.

Finally, this combination of heavy optimistic sentiment and poor technical performance has earned PFE a lowly Schaeffer's Equity Scorecard rating of 1.5, making it a nice pick for a bearish play from our contrarian point of view.

Starbucks

On Thursday, August 4, Starbucks (NASDAQ:SBUX) reported that same-store sales increased by seven percent for the latest quarter, with total sales gaining 21 percent. While the figures appear to still have the message boards chattering away, the figures did little to inspire any sort of technical run from the shares. In fact, this has been SBUX's story for all of 2005. Since December 2004, the shares have been in decline mode, giving back more than 19 percent of their value. While the equity's 10-week and 20-week moving averages have troubled the stock during this time frame, SBUX's long-term uptrend appears to still be intact. Looking at the monthly chart below, we can see that while the shares have given up support at their 10-month trendline, support still lies beneath at their 20-month moving average. The last time the equity broke this long-term level was in December 2002.

You may also notice from the chart below that the 55 and 50 levels have confined the shares for much of this year. It just so happens that peak call open interest lies at the 55 level, while (you guessed it) peak put open interest resides at the 50 level. Currently, SBUX is trapped betwixt these two areas, with a bias toward the upside after rebounding near the 50 level once again.

Click the following link to see a Monthly Chart of SBUX since December 2002 with 10-Month and 20-Month Moving Averages: www.schaeffersresearch.com/commentary/observations.aspx?ID=13857 .

SBUX's sentiment outlook is very similar to that of PFE's, though without the long-term downtrend to muddy things up. Options players have turned decidedly bullish toward the stock, as SBUX's Schaeffer's put/call open interest ratio (SOIR) plunged from its July 25 reading of 1.18 in the 96th percentile to its current reading of 0.83 in the 41st percentile. Short sellers, meanwhile, are edging toward complacency. After declining 15 percent during July, it would now take a mere 3.6 days to cover the 10.2 million SBUX shorted shares. Furthermore, the short-selling crowd has been deserting the security for some time, as short interest has dropped 42 percent during the past year.

Wall Street is still trying to shake off that coffee buzz, as eight of the 17 covering analysts still rate the shares a "buy" or better. With eight other brokerages doling out "holds," SBUX appears to be more vulnerable to downgrades than upgrades, leaving the door open to a potential downside move. The net result of this bullish sentiment and weakening technicals is a fairly benign Schaeffer's Equity Scorecard rating of 4.5 out of 10. Look for SBUX to continue its sideways trend until someone either ups the caffeine dosage or switches to decaf.

Maxtor

Hard-disk manufacturer Maxtor (NYSE:MXO) is garnering a bit of attention from the message boards today. In all likelihood, today's chatter is concerning the stock's rather negative reaction to the company's pricing of $300 million in convertible senior notes. And rightly so, as yesterday's move not only signals that MXO is taking on more debt, but since these are convertible notes (meaning that they can eventually be exchanged for MXO shares), the company's stock value will be diluted as a result.

Admittedly, MXO's technical charts since the beginning of the year are far from interesting, as the shares have done little more than ricochet between the 4.50 and 6.00 levels. Pulling back to a monthly chart, however, reveals that MXO could be facing a rather key juncture soon. In its sidling ways, the stock has managed to overtake its 10-month moving average, but its 20-month is quickly descending into the area. The shares have not closed a month above both of these trendlines since December 2003.

Click the following link to see a Monthly Chart of MXO since September 2003 with 10-Month and 20-Month Moving Averages : www.schaeffersresearch.com/commentary/observations.aspx?ID=13857 .

Sentiment offers little encouragement for a breakout to the upside from a contrarian point of view. Options players have become more hopeful, as the security's SOIR dropped from its July 22 reading of 0.49 in the 76th percentile to its current perch at 0.32 in the 24th percentile. And while short interest skyrocketed 106 percent during July, it would still take a mere 2.65 days to cover the 7.6 million MXO shorted shares at the stock's average daily trading volume. Wall Street, meanwhile, is rather evenly split, with two "buys," eight "holds," and two "sells." However, with a bias to the upside from its short-term and long-term technical performance, MXO has eked out a Schaeffer's Equity Scorecard rating of 6.0 out of 10.

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .