MEMC Electronic Materials Inc. (WFR)
(9/4/07)

WFR is a semiconductor stock whose run does not as yet appear finished, based on the current wave pattern in progress from 2001, when it had fallen as low as $1.00.  Following its sell-off in April-July, when it lost about $19, the stock still hasn't divested itself of the Put interest that had built up, suggesting that process is still incomplete, and leaving the door open for a retracement of the decline. 

The long-term wave count works rather well for the stock, which gives confidence to the forecast.  The stock broke above some key Fibonacci resistance when it got through the 61 area on August 31.  This was a positive, but it could result in a pullback.  Ideally, we'd like to see it remain above 58 to support the wave count.  Assuming it does so, there is also some resistance at the 64.70, which was a problem for the stock previously.  A conservative entry might therefore await a break through this level, although it means giving up some upside if pullbacks don't amount to much.  You'll have to determine your own risk tolerance.  57.07 is lower support, and you may therefore want to limit your risk to here.  If the overall forecast is correct, then we'd be looking for a retest of the 68.57 high, with a Wave (5) high occurring at either the 70-71 area, or 75, which offers some decent upside even on the conservative entry.

For an option play, you might consider the January 2008 $65 Call (symbol WFRAM), currently selling for $5.60 with the Delta at 0.51.  

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