Sandisk (SNDK)
Update- August 24, 2007

I wanted to update our wave count on SNDK from the previous Wave Watch back in February.  The stock has risen in line with the expectations discussed at that time, and in light of the corrective pullback from its 59.75 high in July, we think there's another leg up still ahead.

The stock had a nice run from March to July, and as the updated wave count suggests, the advance is countable as four of five waves required complete the Wave C rally.  I thought at first the stock might have topped out in the July, although the decline that followed traced out a fairly textbook flat correction.  The recovery patterns by contrast have been looking impulsive, which supports our labeling.  If the outlook is correct, then our expectation would be for a retest of the 59.75 high of July 20, with a target to conclude Wave C at the 60 or 61 area.  There are intervening levels of resistance at 55.0 and 58.46.  You may want to await a break through 55.80 before committing.  For those who don't mind more risk, 51.94 and 50.60 are support, and the stock needs to remain above 49.45 if indeed the wave count is valid.

For options plays, the October series probably allows enough time for this to develop; otherwise, the next series is January.  We're looking at the October $55 Call (symbol SWFJK) currently selling for $3.50 with the Delta at 0.49.  

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