Schaeffer's Street Chatter Highlights the Following Stocks: CryptoLogic, Host America, Wal-Mart Stores, Red Hat, and Microsoft.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: CryptoLogic (NASDAQ:CRYP), Host America (NASDAQ:CAFE), Wal-Mart Stores (NYSE:WMT), Red Hat (NASDAQ:RHAT), and Microsoft (NASDAQ:MSFT). "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:

CryptoLogic

According to Hoover's, CryptoLogic's (NASDAQ:CRYP) Ecash secure payment system lets more than two million gamblers from 240 countries deposit and withdraw funds from a personal account to use at online casino operations. The firm's WagerLogic provides gaming sites with software geared primarily toward online casino and poker; product features include multiple languages and currencies.

After peaking on June 7 at 36.81, the shares have lost more than 28 percent under the guidance of their declining 10-day and 20-day moving averages. The equity has also breached key support at the 29 level. From a long-term perspective, the stock has broken below its 10-week and 20-week trendlines, leaving the moving averages poised for a bearish cross. Potential support for CRYP lies at the 25 level. This region marks the site of a 50-percent retracement of its rally from its October low to its June high.

Click the following link to the Weekly Chart of CRYP since October 2004 with 10-Week and 20-Week Moving Averages: www.schaeffersresearch.com/commentary/observations.aspx?ID=13636 .

Considering the equity's lackluster performance, it should come as no surprise that options players have begun to load up on bearish bets. The stock's Schaeffer's put/call open interest ratio (SOIR) has risen from its June 17 low of 0.22 to its current perch of 0.39 in the 90th percentile. Furthermore, short sellers increased their bearish bets by 13 percent in June to a 21-month high. However, with a short-interest ratio of only 1.44 days to cover, it is unlikely the stock will benefit from much short-covering support. Wall Street has yet to pick up on this security, as just two analysts following CRYP with both awarding it a "hold" rating.

While the equity scores a ranking of 7.0 out of 10, investors may want to hold off to see if support at the 25 level buoys the shares.

Host America

Host America (NASDAQ:CAFE) provides food service management, energy management conservation, and pre-employment background screening. This little stock popped from out of nowhere earlier this week and continues to capture the attention of traders. On July 12, CAFE announced that Wal-Mart Stores (NYSE:WMT) would install its fluorescent-light control systems in 10 Southwestern stores. In a Dow Jones Newswire article, H.C. Wainwright analyst Bill Relyea said WMT's use of the LightMasterPlus system could prompt a wider rollout of the technology, not only in WMT stores, but in other big-box locations. While financial terms weren't disclosed, speculators banked on the hope that the trial agreement could lead to Host America installing its LightMasterPlus systems in all of WMT's 3,725 domestic stores.

The shares of CAFE gapped sharply higher on the positive news and continue to see heavy trading volume. In fact, the equity tagged yet another new all-time high today before retreating back below the 10 level.

Click the following link to see the Daily Chart of CAFE since May 2005 With 10-Day and 20-Day Moving Averages: www.schaeffersresearch.com/commentary/observations.aspx?ID=13636 .

Sentiment on the security is a little hard to come by at the moment. Options on the security do not currently exist, and not one brokerage house is offering up a rating on the company, according to Zacks. Meanwhile, short interest retreated in June to multi-year low. With a short-interest ratio of 0.41 days to cover, the stock isn't going to see any short-covering support. However, CAFE could see additional upside as the stock appears on the radar of more traders.

Red Hat

Hoover's states that Red Hat (NASDAQ:RHAT) dominates the market for Linux, the open-source computer operating system (OS) that is the chief rival to Microsoft's (NASDAQ:MSFT) Windows operating systems. Furthermore, the company's product line includes database, content, and collaboration management applications; server and embedded operating systems; and software development tools. Red Hat also provides consulting, custom software development, support, and training services.

After clawing its way higher from its April low of 10.42, tacking on more than 45 percent, the stock is currently consolidating into support at its 10-day moving average. What's more, RHAT has enjoyed the steadfast support of its 10-week trendline since the beginning of May. While the equity has broken above resistance at its 10-month moving average, the security must still take out a potential roadblock at the 16 level in the form of its 20-month trendline.

Click the following link to Daily Chart of RHAT since April 2005 With 10-Day and 20-Day Moving Averages: www.schaeffersresearch.com/commentary/observations.aspx?ID=13636 .

Sentiment toward the shares is firmly entrenched in the bears' camp. The equity's SOIR rests at 0.95 and is just four percent shy of hitting a new annual high. Short interest dipped by six percent in June to 24.8 million shares, but still accounts for 15 percent of the security's total float. At more than six times the stock's average daily trading volume, the equity could benefit from some short-covering support. Wall Street is split over the stock's prospects. Zacks reports that eight analysts give it a "buy," five award it a "hold," and two rate it a "strong sell." There is still ample room for upgrades should the shares continue their uptrend.

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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 .