Dow Jones 10875.59 -6.08 8:29 am PST, December 17, 2005  NASDAQ 2252.48 -8.15 For info, visit access.smallcapnetwork.com S & P 500 1267.32 -3.62 Change your subscription status here Russell 2000 683.09 -1.69 VOLUME 05: ISSUE 94  Trading Alert: Elephant Hunting for '06 Gains. Investing at this time of year tends to be an enigma. Visions of Santa rallies, tax loss selling and quadruple witching--such as Friday--dance in investors' heads, making trading activity both a blessing and a curse.  We looked around for three big cap names, which in our opinion appear poised to throw off good trading opportunities as we move through this period and into Q1 2006. Hang on... We'll look at each of the three and then put in some collective comments at the end for a big finish. As well, we'll list which call option we think would satiate the more aggressive traders among us.  Say Yes to Drugs. First off, Bristol Myers (NYSE: BMY). The drug giant has had an ugly year as evidenced by the chart. The non-technical term is a rout. Nasty decline followed by a nice bounce. As you can see, the decline from north of $26 in the spring to $20 has been profound. We have put the retracement lines in the chart and feel that the recent action and bounce off of $20.72 bodes well for a decent run or at least one that should give traders a decent profit. Technically, we could see the shares improve to the mid $20's with an eventual logical profit objective (LPO) of $27.50. A stop loss at $21.30 would be prudent.  The vagaries of the drug sector are well known to SmallCap readers and BMY, as a play is likely a fairly gutsy call. The projected earnings for 2005 and 2006 are $1.40 and $1.24 respectively, boasting p/e's against Friday's $22 price of 15.7 and 17.75 times. Not outrageous and since the shares have been in the tank, even a moderate surprise or upgrade should send the shares higher. The bottomline is that the shares look compelling to us and tax loss selling has likely taken its toll on the price. Come Q1 2006, we could well see a nice improvement as the New Year brings in investors/traders looking for beaten down, quality names. Hey, Cisco... Ah, Cisco (NASDAQ: CSCO), the stock investors apparently love to hate. Ironic, since the company has lots of cash, no debt and, in our opinion, good prospects. Go figure. Another crappy chart: I love these. Dropping from north of $20 in mid 2005 to $17.50 Friday, the shares just confound me. The chart shows the retracement levels from the decline over the last year and it won't take much to move the shares higher through the next level. We see $21.70 as the LPO and traders' should put in a $17 stop-loss. Now get this: the company is buying back almost $11 billion of its stock. It has almost $14 billion in cash and NO DEBT. Earnings projections for 2006 and 2007 are $1.04 and $1.18 showing p/e's against Friday's $17.50 price of 16 times and 15 times respectively. We profiled CSCO in our special report a few weeks back and will stick with 'cause we like it and think both the fundamentals and technicals look very compelling. There's not a lot more to say. Once the shares get out of their own way--soon--looks like a decent trade short and long-term. Ask The Oracle. With about $3 billion in net cash and an ugly year chart-wise, software behemoth Oracle (NASDAQ: ORCL) also looks good to us. Volatility, thy name is Oracle. Mommy, this is one wild ride. With the shares at $12.70, it is the 'cheapest' of our triumvirate, and no less interesting. Yes, ORCL's year over year growth has slowed somewhat, but I would bet on Ellison for 2006. We see an LPO of $17.80 and would put in a stop loss at around $11.40-ish. The shares bounced off the .318 retracement of the 2005 decline, and another test is likely coming, even if it just rises with the 'Santa-January-end of tax loss selling' rally. Earnings projections for 2006 and 2007 are currently 80 and 91 cents. The math shows projected p/e's against Friday's $12.70 price of 15 and 13.5 times respectively. Again, once the name blips back on radar screens or there is some sort of earnings/revenue surprise, the shares offer decent value in our opinion. Analysts are sitting on the fence as far as what to do with the shares. We believe a good trade is at hand through Q1 2006. Party Like A Market Maker. We feel that the value proposition for these stocks is now. Once investors get excited after a move up, that opportunity will be gone. Our rationale is based on more than a simple buy low sell high call. Investors have to think like a market maker or specialist. None of these companies have gone up this year and as noted, tax loss selling is likely a factor right now. As the pro's take in all this sold stock they would look for a nice move up to get rid of it. With all three of these trades, we've included the 3x3 DMA (Displaced Moving Average) which shows the bull bear battle of late with breaks above and below the 3x3. This action is usually a good sign of stocks attempting to put in a bottom, even if it may be a fairly short-term bottom. As well, we've included the retracement levels. Since these stocks have all had crappy years, investors should pay close attention to those price targets. The bottomline is that we feel these washed out names are poised for a spurt on good news or simply a continued market rally. All have acted well in the last month and once we clear the year-end, those in position should benefit. For now, we'll look to shave some decent small profits with the potential for much bigger gains, but no guarantee of the latter. As promised, the calls that look good to us for Cisco are the 2006 April 17.50 at around $1. Here's the list; http://finance.yahoo.com/q/op?s=CSCO&m=2006-04. Scroll across the top for other expiries. For Oracle, the 2006 June 12 calls are around $1.30. Here's the list: http://finance.yahoo.com/q/op?s=ORCL&m=2006-06.  Finally, the Bristol Myers 2006 June 22.50 calls at just under $1 look interesting. Here's the list: http://finance.yahoo.com/q/op?s=BMY&m=2006-06.  Let's be clear, these are all aggressive plays, especially the options if you choose to leverage through that route. And if the shares decline further as the tax loss selling picks up, step up for the calls as they cheapen.  Be nimble, take profits and watch the action carefully. And remember call option purchases should be undertaken with risk capital only. If the moves fail to appear within the time frame, you could well lose some or all of the premium. We think the foregoing will start your 2006 with a bang. Pick away at the shares or options as tax loss season winds up. Buying all at once will likely be the wrong strategy. Taking advantage of weakness over the next ten days will likely be the better play. That's enough for today....     We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402  San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from SmallCapDigest Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. 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