Investors should either avoid or short shares of Linear Technology, a large scale maker of semiconductors worldwide. Given the cyclical downturn in the economy, extreme competitive pricing among industry peers, and high valuation, it is more than likely Linear will miss earnings this week. While valuation alone is never a solid reason to short a stock, Linear is caught in the cross hairs of brutal slowdown in sales coupled with increased industry output. Furthermore, Intel’s press release suggest a real lack of demand from end users, and weak Iphone channel checks shows that Apple (AAPL) is no longer selling as many units as they hoped for---all of which paints a rather negative perfect for Linear

Likewise I would avoid Xilinx (XLNX) another semiconductor who will likely report lower gross margins next week as well.

Rumors are flying around Genentech (DNA) regarding a potential $95 bid from rival drug maker Roche. Roche, which already offered $89 for Genetech---only to be rejected by Genetech’s board, has been rumored for several months to make a higher bid for Genetech. Most who follow Genentech’s pipeline believe that Roche will ultimately have to bid in the mid-$100 range to get the board and shareholders final approval

Zep is the largest seller of vehicle cleaners in the U.S., selling to more than 75,000 auto-body repair shops. They report Monday, and given that the most recent quarter saw EBIT of 2.8%,and rising input costs, Zep will likely trade low throughout the week. Zep is also expensive by all valuation metrics trading with a current P/E of 25, and ev/ebitda of 9.6, all of which are well above the industry average. Zep just fired 5% of its total workers, as the company "unexpectedly began experiencing a significantly lower order rate in October as a result of general economic conditions while continuing to experience high raw material input costs."

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