The short-term technicals have improved since Wednesday's lows, with both the Nasdaq Composite and Philadelphia Semiconductor Index (SOX) above their 200-day simple moving averages at 2073 and 433.90, respectively. This is not a signal for a bottom, as there remains the risk of a bear market into at least mid-2006. However, the volatility can be traded with a favorable success ratio. The weekly chart profiles of the Nasdaq and SOX will remain negative if they close the week below their five-week modified moving averages at 2119 and 461.60, respectively. If they close October below their five-month MMAs of 2091 and 446.45, it would shift their monthly chart profiles to negative. Technology is 14.2% undervalued according to my models, making it the cheapest sector in the market. I will be focusing on leadership when I detect a bottom for the Nasdaq and SOX, or if my bear-market call turns out to be wrong. eBay, Juniper Networks and Verisign, which have reasonably solid profiles in my models, reported earnings Wednesday after the closing bell. The market reacted negatively to eBay's ( EBAY) 2006 guidance, sending its shares as low as $39.53 Thursday. I rate eBay to be 27.7% undervalued, with fair value at $54.98. Its weekly chart profile will go negative on a close below its five-week MMA of $39.53, indicating risk to my monthly value level of $36.47. This is where long-term buyers should emerge. Juniper Networks ( JNPR) beat consensus estimates and raised guidance. Shares traded as high as $23.97 Thursday morning, up 10.8%. The stock is 44.0% undervalued, with fair value at $42.10. Juniper's weekly chart profile shifts to positive on a close this week above its five-week MMA at $22.73. My monthly pivot at $21.83 is now the value level, and quarterly risky levels remain at $32.76 and $33.33.
VeriSign ( VRSN) beat the consensus and cited strong demand for Internet and communications services. Shares traded as high as $22.75 Thursday morning, up 7.1% from Wednesday's close. Its shares are 35.4% undervalued, and its weekly chart profile will shift to positive if it ends the week above its five-week MMA of $21.89. My monthly value level is $19.48; my monthly risky level, $26.25. Broadcom, Google and SanDisk, which are set to report after the close Thursday, have had strong price momentum the last few weeks. The earnings expectations bar has been raised rather high for these three, particularly given the market's sharp rebound Wednesday. Broadcom ( BRCM) is expected to report EPS of 38 cents. I estimate that Broadcom is 24% undervalued, with fair value at $57.51. The weekly chart profile is positive but overbought. A weekly close below its five-week MMA of $44.32 would shift the weekly chart profile to negative. My monthly value level is $40.64 with a monthly pivot at $44.45, and quarterly risky levels at $45.81 and $48.56. Google ( GOOG) is expected to report EPS of $1.36. Google is 7.6% undervalued; fair value would be $320.34. Its weekly chart profile is neutral and its five-week MMA is $301.72. Its 52-week high is $321.28. My monthly value level is $301.60; my monthly risky level, $330.29. SanDisk ( SNDK) is expected to report EPS of 35 cents. The shares are 48.5% overvalued, with fair value at $33.96. The weekly chart profile is positive but overbought, with the five-week MMA at $44.48. My monthly value level is $41.35, with weekly pivots at $50.05 to $52.51. The 52-week high is $53.47.