Netezza Corporation (NZ) is set to report earnings After the market closes on Tuesday, November 25. Netezza Corporation provides data warehouse appliances to enterprises, mid-market companies, and government agencies worldwide. It offers Netezza Performance Server (NPS) that integrates database, server, and storage platforms in a purpose-built unit to enable detailed queries and analyses on stored data. These queries and analyses, referred to as business intelligence, provide customers with insight into trends and anomalies in their businesses, thereby enabling better strategic decision-making.

NZ is expected to earn a profit of 4 cents for its 3rd quarter. We expect the tech company to announce earnings that will beat investors’ and analysts’ expectations. Netezza has had no problem handling consensus estimates smoking the expected numbers by an average of more than 80% for 3 straight quarters.

Analysts expect the company to grow around 40% next year; therefore, it can sustain its forward P/E of 28.28. We also like to see Netezza’s PEG ratio under 1 at .86. With insiders owning 46% of the shares outstanding, we expect management to do what’s necessary to move shares higher. Their wallets depend on it.

The stock has been as high as $10 recently. Now, with current market conditions, it’s hard to say what a positive earnings surprise will do or how long it will last. With a positive earnings announcement and some encouraging guidance going forward, we would be surprised to see the stock trade up to $7 and change.

Suggested Stop: $3.57

As we analyzed all the ETF charts this week, we saw one disaster after another. So much damage on so many charts, it makes us think about all the pictures you see after a hurricane, tornado or earthquake. You see stuff just thrown around everywhere and it’s all out of place. That’s what just about 90% of the charts we reviewed looked like. Much like the repair after a natural disaster, we believe it’s going to take a long time to fix all the damage that has been done.

According to our Technical Analysis, one chart that may be ready to be mined is silver. It appears to us that two silver ETFs should provide outperformance in the days and weeks ahead: iShares Silver Trust (SLV) and PowerShares DB Silver (DBS). As we will see below, agriculture also had a strong showing. When you see multiple buy signals in the same sector, the confirmation, and we are BIG fans of confirmation, of different charts agreeing usually means good thing ahead for investors.

Here are the rest of the sector carts we like and dislike:

BUY

PowerShares DB Agriculture (DBA)
iPath DJ AIG Agriculture TR Sub-Idx ETN (JJA)
ELEMENTS MLCX Grains Index TR ETN (GRU)
United States Natural Gas (UNG)
HealthShares European Drugs (HRJ)

SELL

First Trust Financials AlphaDEX (FXO)
iShares Dow Jones US Healthcare Provider (IHF)
First Trust ISE Water (FIW)
Internet Architecture HOLDRs (IAH)
iShares S&P North Amer Tech-Software (IGV)

Internationally, we see only two charts that we like, iShares MSCI Chile Investable Market Index (ECH) and Claymore/Robeco Developed Intl Equity (EEN). Otherwise as we moved through bond ETFs, currency ETFs, index ETFs and style ETFs, all we saw was carnage.

We screened through all the top performing industries looking for companies that might be potential buy candidates. We found just 1 that interests us, Orthovita Corporation (VITA).

Orthovita is a spine and orthopedic biosurgery company with proprietary biomaterials and biologic technologies for the development and commercialization of synthetic, biologically active, tissue engineering products. It develops and market synthetic-based biomaterials products for use in spine surgery, the repair of fractures and a broad range of clinical needs in the trauma, joint reconstruction, revision and extremities markets.

Despite the economic freefall, VITA’s sales are headed in the right direction. For its third quarter, sales increased 42% to $20.6 million as compared to $14.5 million for Q3 2007. In fact, the 3rd quarter sales were up 7% versus the second quarter of ’08. Year-to-date, VITA’s 2008 sales increased 32% to $56.1 million as compared to $42.5 million for the same period in 2007.

This rapid growth has led management to raise full-year 2008 sales guidance to about 30% growth over 2007 from previous guidance of 20% to 25% growth. So far Orthovita has yet to produce a profit. That’s probably why it trades around $3.00 per share. Analysts don’t expect the medical products company to turn a profit for the next year or two. However, we feel that is subject to change.

Last quarter the company only lost 2 cents per share versus the consensus earnings estimate of a 5 cent loss. Management failed to provide guidance for 2009 during its last conference call. Instead, they are holding out until they report year end numbers early in ’09. We wouldn’t be surprised to hear them utter the magical words; we expect to turn a quarterly profit by year’s end. Such an announcement would, in our view, drive the share price higher.

Right now, the 12 month consensus price target is $4 per share. There are a few paths we think VITA’s shares can take to get there.

1. They announce they will turn a profit in 2009 during the 4th quarter conference call.
2. The stock currently trades at 3.25 times sales. While it is a little pricey for our liking, with a projected growth rate of 56% for 2009, we believe VITA can maintain its current price-to-sales ratio. At 3.25 times 2009’s projected revenue of $93 million, VITA is a $4 stock.
3. VITA has a medical device under review for approval with the FDA. Cortoss is a high strength, bonding, self-setting composite which has been engineered specifically to mimic the characteristics of human cortical bone. Cortoss is intended for use in the treatment of compression fractures of vertebral bodies and in orthopaedic procedures where bone screws of fixation devices cannot be sufficiently tightened or have stripped and lost purchase.

   While it is approved for use in the European Union and Australia, a FDA approval in 2009 would go a long way in pushing the stock towards $4.

4. As always with these smaller high growth medical companies, a Cortoss approval and continued execution could catch the eye of a bigger fish. Orthovita’s portfolio of products might be a nice fit with a company like Stryker Corporation (SYK).

Suggested Stop: $2.44

Last week was another week where not 1 single industry squeezed out a gain. There were only 9 that managed to outperform the S&P 500. And if you remember yesterday’s post, the S&P is not too healthy in its own right. Obviously things are not looking so good anywhere right now. Here is the list of the best and worst performing industries.

As you can see, last week we had some big losers. Here are the week’s poorest performing industries:

Our Technical Analysis did uncover a few industries with new buy & sell signals.

(click on the industry to see a list of the best and worst performing stocks in the industry)

BUY

NonLife Insurance
Oil & Gas
Gas Distribution

SELL

Banks
Consumer Services
General Retailers
Software

Friday’s late selloff has put all the indexes in precarious territory. If we don’t hold the Friday closes, we could be in for yet another steep fall. Futures are announcing that’s where we are headed. None of our indicators give us any reason to believe otherwise. They are all deep into sell land.

All the index charts have a similar pattern that indicates we are probably headed to the lows of late 2002 and early 2003. As you will see on the chart below, 800 is on the way for the S&P 500. For the Dow, 7500 is not a stretch. For the NASDAQ, 1250 is on tap. For the NYSE, 5000 is next up, then 4500.

Investors might want to consider buying ETF that move up when the markets go down. ProShares offers Short Dow30 (DOG) & Short S&P500 (SH) which move 1 for 1 in the opposite direction of the indexes. If the Dow is down 1% , then DOG will be up 1%. For twice the return, you should consider ProShares UltraShort Dow30 (DXD) & UltraShort S&P500 (SDS). These ETFs return double the inverse of the underlying indexes.

Salesforce.com (CRM) is set to report earnings after the market closes on Thursday, November 20. salesforce.com, inc. provides on-demand customer relationship management (CRM) services to businesses and industries worldwide..

CRM is expected to earn a profit of 7 cents for its 3rd quarter. We expect the online client relationship manager to announce earnings and guidance that will miss investors’ and analysts’ expectations.

The way we see it, beat or miss earnings, Salesforce.com stock is going to swing wildly after the quarterly check-up numbers are announced. There is a lot of uncertainty regarding CRM’s immediate future. Zacks recently reiterated its buy ranking saying Slaeforce “has substantial subscriber and customer growth.” Zacks did note they expect earnings per share to fall for the rest of the year

Contrasting the buy view, this Tuesday, Cowen’s Peter Goldmacher wrote that investors should avoid CRM’s shares. He says to expect CRMs 3rd quarter to be “soft,” but that “it’s hard to say what’s really priced in.” In other words, he thinks the stock has the potential to get hit hard.

Looking at the CRM’s valuations, it’s hard to see how they have a little air come out of the balloon. Shares current trade hand at a P/E of 101 and at 48 times next year’s earnings; that’s unheard of in this market. Analysts’ growth expectations are nowhere near the heights that can support these loft P/E. Salesforce.com is currently trading at 3.6 times sales, while this isn’t off the charts, it still is priced to near perfect execution. With a PEG ratio of 2.23 and Return on Equity of only 7.29, we don’t see how perfection happens.

We believe the risks are to the downside; however, Slaesforece.com shares can move aggressively in either direction following earnings. Traders looking to reduce their risk should consider an options straddle. More aggressive investors can short the stock or buy puts.

Suggested Stop Long: $23.11
Suggested Stop Short: $31.65

From our Friends at INO:

When Paulson came out yesterday and stated that his earlier plan to save the western world was not working, he offered up a plan “C” (or is it “D”) to relieve pressure on consumer credit, scrapping his earlier effort to buy the value mortgage assets.

No matter what happens or what the next plan is here, are the 3 reasons I believe stocks are headed lower.

1. * Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.
2. * Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.
3. * Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.

New Video analysis of what could really happen:

Okay, so let’s look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the ’70s. That bear market was brutal as it did not let anyone out. Over the course of the early ’70s, the bear market basically wore people out to the extent they eventually just threw in the towel. We believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.

The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope. The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace.

The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama cannot make changes until he is sworn into office and there are no guarantees his changes will fix anything. Yes, he may hit the ground running, but the reality is, it’s not for over two months from now and a lot can happen to the market in two months. The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and I expect they will be, it’s going to push this market and everything else down to new lows. It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.

Having lived through the bear market of the ’70s, We know firsthand how difficult the journey we face is going to be. Now this may seem like a very pessimistic outlook and in some ways it is, however there are always opportunities to make money in the marketplace. These opportunities may not be in stocks! , it may be in forex or the commodity markets.

So buckle your seatbelt. We are probably in for a bumpy ride…check out the new video analysis:

Although the market is taking on more water than the Andrea Gail captained by George Clooney, we think buying opportunities could surface in the weeks ahead. During our weekly Technical Analysis trip though 800 plus ETF charts, we noticed many charts that look like they might have bottomed out. We could have plenty to choose from in the weeks ahead.

In the meantime, we found only a few ETFs with emerging technical setups warning of us of potential loses or clueing us in on some possible gains.

INTERNATIONAL ETFs

Buy

iShares MSCI Chile Investable Market Index (ECH)
Keep an eye on emerging markets ETFs as well.
Many of these ETFs were this I —— I close to a buy signal. We will see if they can cross the line next week.

SECTOR ETFs

Buy

Vanguard Telecom Services ETF (VOX)
iShares S&P Global Infrastructure Index (IGF)

Sell

First Trust Financials AlphaDEX (FXO)
Broadband HOLDRs (BDH)
PowerShares FTSE RAFI Consumer Services (PRFS)

STYLE ETFs

Buy

iShares Morningstar Large Value Index (JKF)

Sell

iShares KLD Select Social Index (KLD)
Claymore/Ocean Tomo Growth (OTR)
ELEMENTS Morningstar Wide Moat Focus ETN (WMW)

Yesterday we wrote about Mortgage Finance companies as potential targets for some major upside. We screened all the companies in the sector looking for potential buy candidates and came away with one, Radian Group (RDN).

Radian Group is a leading provider of credit enhancement for the global financial and capital markets. RDA evaluates credit risk, provides products and services in mortgage insurance, public finance, structured finance, reinsurance and other financial services help clients and investors manage risk.

Like many stocks that have anything to do with mortgages, this stock has been beaten down like Roy Jones Junior against Joe Calzhage. The 52 week range is $14.46 to 70 cents. Currently the stock trades at a hair below $4 per share.

There are four reasons we believe RDN is worth your consideration.

1. As we mentioned before, our technical analysis revealed a buy signal for the Mortgage Finance Sector
2. RDNs chart also produced two buy signals
3. While the company does have its share of financial difficulties, its valuations on a few levels gives us hope for a turnaround or possible takeover when market conditions improve.
4. Taxpayer money is coming the sectors way, you can count on it.

Technical Analysis of the Mortgage Finance Sector.

The sector has been bludgeoned during the last year. The Mortgage Finance chart recently had a positive MACD crossover under ZERO, usually a reliable buy signal. As depressed as the sector has been, we believe the darkest days are probably behind us and the light we see is the end of the tunnel and not an oncoming train.

Technical Analysis of Radian Group’s Chart

Positive RDN Valuations

Fundamentally there is very little to like with Radian, they are in a difficult environment and losing money faster than broken down horse players betting on three legged ponies. That being said, there are 2 valuations that jump off the page to us. First, RDN’s book value is around $29 per share. That makes its $4 price tag look attractive. Second, RDN trades at only 0.18 times sales. That means Radian does 5 times more in revenue than the entire value of all its shares outstanding. Again, it gives us hope, and that’s in now don’t you know?

Taxpayer Money is on the Way!

The bailout bonanza net is widening and catching all kinds of fish: Banks, Automotive Manufactures and now Mortgage Companies have their place in line. A new mortgage assistance plan announced by the Federal Housing Finance Agency is expected to takes effect on Dec. 15. The plan calls for borrowers to get reduced interest rates or longer loan terms to make their payments more affordable. And this is just the start as “critics” say… you guessed it, “it’s not enough.”

When you add it all up, the sum of the parts brings us to one conclusion: RDN’s share price is headed higher in the near-term. We believe the stock will at least test its 200 day moving average of $4.55. That’s nearly a 26% return from its current price. A close above the 200 day moving average would probably push the stock into the $5.70 range, a 46% return. Those numbers can go a long way in repairing some of the damage done to many portfolios.

Suggested Stop: $2.93

The Correct Call extends its warm gratitude for the bravery and sacrifice of all U.S. veterans. Armistice Day, as it was known back then, was first celebrated on November 11, 1918 to honor the end of WWI. In 1954, after WWII and the Korean War, congress changed the name to Veterans Day to honor all veterans of war. We thank all of the men and women who have served and who are currently serving this great nation. We recognize that our freedom didn’t come free.

Last week was a tough week on all sectors as only 7 were able to post gains. Our readers should recognize a few of the sectors on top as we have been highlighting telecom and utility stocks in the technical analysis portion of a few recent Sector Performance posts.

Keep the following sectors in mind when you are considering which stocks to buy and sell. The week’s top performers were:

Here are the week’s poorest performing industries. We guess the market is trying to bankrupt coal before the president elect can.

During the Technical Analysis part of our weekly sector review, once again, we only found two new early buy signals. One is very intriguing to us, Mortgage Financing stocks. Due to the subprime fiasco, this sector has been stomped on and distinguished like a cigarette but by a militant non-smoker. There could be huge gains in these stocks if the positive MACD crossover bears fruit. The other buy confirmation we found are Oil & Gas Stocks.

One the downside, it’s Déjà Vu all over again, as we find more sick charts than healthy ones. The sectors with new sell signals include:

Electronic Equipment
Consumer Services
Industrial Suppliers
Software
Large Cap Growth Stocks
Small Cap Stocks