Email Version, Section 1, Tuesday, 01/11/2000
The SplitTrader.com Newsletter Tuesday 01/11/2000 1 of 1
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In This Newsletter:
Market Commentary - SEEING DOUBLE
Split Announcements - FWRD, YHOO, TMPW
Sector Watch - Breakdown by sector of market performance.
Editorial - Let's Keep Our Perspective on Things
Play-of-the-Day - KLAC
Stock Plays - New - Updates - Drops
The biggest story of the day today was Yahoo! Beating earnings
estimates and announcing a 2 for 1 split.
Today was a down day pretty much all across the board. The Dow
was off 61 to 11,511. The transports and utilities went with it.
The Nasdaq Composite ended the day at 3921, off 128 very painful
points. Technology and the Internets got hammered, with the
Nasdaq 100 off 4.66%, and the CBOE Internet Index off 4.46%.
There were really very few bright spots today. That's the problem
with improving market breadth. It goes both ways. Advancers
buckled to decliners today on the NYSE and on the NASD by about
a 2:1 margin. Volume was heavy, with over 1 billion shares traded
on the NYSE, and nearly 1.7 billion traded on the Nasdaq. Any
predictions for how long it will take us to hit 2 billion?
The 30-year Treasury gave up 1 and 5/32 taking the yield to 6.68%.
The last time we saw yields at this level was (dare we say it?)
September 97. But that was ages ago…in the other millennium.
The mainstream media feels a need to peg the bond market troubles
to worries over the Fed meeting in February. A more likely
explanation for the action is that the bond market was under
pressure from huge supply, with $2.5 Billion GMAC issue coming to
market today, and Fannie Mae and Ford waiting in the wings.
Yesterday and today, a couple of Federal Reserve Bank presidents,
Broaddus from Richmond, and Parry from San Francisco made comments
that caught the bond market's attention. Broaddus was
characteristically hawkish yesterday, and today Parry said that
growth in the economy was not necessarily inflationary. Parry,
being a little closer to Silicon Valley, may be more in the New
On the economic front, wholesale prices for November were reported
today, and came out stronger than expected. Economic
announcements on the calendar for this week are the PPI, Retail
Sales, and Jobless claims on Thursday, and the CPI on Friday.
Turning to stock stories, Yahoo! was just about all anybody was
talking about today. There was a fairly significant deal
yesterday that slips my mind at the moment. After the close,
YHOO announced earnings for the quarter, and beat the consensus
estimates by 4 cents, coming in at $0.19/share. More
significantly, they announced a 2:1 split. We've been predicting
that one would be announced, and you can probably look for the
stock to be added to our recommended list soon. The split is the
4th in as many years.
Along with the earnings and split announcements, Yahoo! reported
that their revenues for the quarter were $201 million, a huge
increase over last year. Also, they report that they now have
over 120 million users worldwide, with 465 million page views per
day and that users outside the US now approach 50% of total users.
One final important point is that they are filing a shelf-
registration specifically to enable them to use their shares for
the purpose of acquisitions, a point that has not gone unnoticed
in the wake of the AOL/Time Warner deal.
Rumors are buzzing about if, when, and who will be possible
takeover targets. Among those mentioned: Disney, Seagram CBS,
NBC, Sony, and more probable, MindSpring.
Yesterday darlings were today's dogs. Both AOL and Time Warner
garnered analyst downgrades. Schroeder & Co. downgraded AOL to
Outperform from Significantly Outperform, and CS First Boston
downgraded Time Warner (TWX) to a hold. AOL was down 8 5/8, or
11.88% to $64. Time Warner was off 6 1/4, to $86, a 6.78% decline.
Now we're all trying to digest the ramifications of a world where
new media combines with old media.
A notable analyst upgrade today was that of Intel to a Strong Buy
at CS First Boston. Intel reports earnings on Thursday. The
stock was up 3 15/16 to $89 11/16.
Other earnings news included Seagate (SEG) reporting earnings
better than expected and a rising market share, albeit in a
difficult market environment for disk drive makers. Seagate
ended the day up 5/8 to $42.
Ariba (ARBA) reported today as well, with a widening loss, to
$10.3 million, or 13 cents a share. Revenue was up strongly,
though, to $23.5 million from $6.9 million for the year ago
quarter. The stock lost $3/share and closed at $191.
Notable upcoming earnings dates include Biogen (BGEN) and Intel
(INTC) on Thursday, and on Friday, Akamai Technologies (AKAM) and
We're moving quickly into earnings season, and the earnings
calendar and split related activity and news will be steadily
increasing over the next few weeks.
Yesterday, DoubleClick (DCLK) split 3 for 1. Today CMGI (CMGI)
split 2 for 1. Later this week, Juniper Networks (JNPR) splits
3/1 and Liberate Technologies splits 2/1 on the 14th. Next week,
Novellus (NVLS 3/1), Vitria (VITR 2/1), KLA Tencor (KLAC 2/1),
Oracle (ORCL 2/1), and Portal Software (PRSF 2/1) will split
All in all, there's a pretty full split calendar. One that should
have our readers seeing double.
As for the environment we find ourselves in now, today's selloff
speaks loudly about the overall bias in the market. The deal
yesterday made us forget the fact that there are dark storm
clouds on the horizon. It even made us hope that there might
be at least a couple positive up days for the markets. Today,
we gave back almost all of yesterday's gains, which in anyone's
book is a bad sign. All is not gloom and doom, with Yahoo beating
the street, and the likelihood of many others following in the
very near term, most notably INTC on Thursday. The thing we need
to look at to get a feel for where things may be going is the
landscape. The street expects overall good numbers out of this
earnings season and so ostensibly, the good numbers have been
priced in. At the same time, the street expects a rate hike out
of the Fed in February. Presumably, that has been priced into
the bond and the markets. With that in mind, you would think that
it would take a catalyst to settle the score and force the markets
one way or another. Unfortunately for the bulls, yesterday was
probably the best chance for that catalyst, yet today the markets
sold off. The flip side of the equation is the fact that the
possible negative catalyst has yet to be reported, that being
the PPI and CPI numbers due out the end of this week. Time will
tell, but for today at least, the bulls suffered a loss that may
indeed go deeper than pride or one day. The bears will have their
turn at bat later this week. A home run in the form of numbers
pointing to inflation could be the catalyst to send the markets
tumbling. On the other hand, if the numbers point in the other
direction, the bulls may just have found their real catalyst to
start a sustainable rally.
Tuesday, January 11, 2000, during morning trading
Freight company to deliver forward stock split to investors
Forward Air Corporation (Nasdaq:FWRD) came out this morning to
announce that its Board of Directors had approved a 3:2 stock
split of the outstanding common shares for the Company. The
record date for the split is January 21, 2000. The Company's
transfer agent will distribute the additional shares on
January 28, 2000.
Forward Air is a Greeneville, Tn. based freight forwarding
company. The Company operates a network of surface transportation
hubs allowing for the surface transportation of deferred airfreight.
By operating on or near airports in the US and Canada (67
locations in all) and offering scheduled surface transportation,
they are able to transport and deliver non-time sensitive air
freight for costs approaching 50% of normal air freight. The
Company first went public in 1993 at $14 per share. The split
announcement today marks the second such split for the Company,
the first a 2:1 split in March of 1999. Shares of FWRD have
traded between $10 and $47.38 in the last year. The stock is
currently trading at that high on an intraday basis today.
Despite the significant increase in share price over the last
year, the stock remains somewhat illiquid, with average daily
trading volume of approximately 90 thousand shares. Due to the
low trading volume, SplitTrader.com does not anticipate adding
the stock to our Recommended Split List. We will continue to
monitor the progress of the Company and their stock to determine
if a position is warranted in the future due to a pickup in
volume and momentum. Please check back shortly to view a
complete profile of FWRD.
Tuesday, January 11, 2000, after the market
Yahoo announces fourth quarter numbers and expected stock split
Yahoo! Inc.(Nasdaq:YHOO) came out after the market to announce
their fourth quarter numbers today. The Company announced
earnings of $0.19 on an adjusted basis, beating Wall Street
expectations of $0.15 by $0.04. They doubled revenues for the
quarter. In addition to the earnings release, the Company
announced that its Board of Directors had approved a 2:1 stock
split of the outstanding common shares for the Company. The split
date is expected to be effective on February 14, 2000.
Yahoo has become one of the most recognizable companies on Wall
Street, having established itself as arguably the most
preeminent Internet company on the Web. They were recently
added to the S&P 500 in recognition of their position within the
Internet sector as well as the overall marketplace.
SplitTrader.com has been predicting a split announcement out of
the Company throughout the later half of the fourth quarter of
1999. We anticipate that investors will flock to the stock to
participate in what should be one of the most exciting split runs
of 2000. We anticipate adding the stock to our Recommended Split
List in the near term future to take advantage of the momentum we
believe will develop in the very near future. Please be sure to
view a complete profile of YHOO on the website.
Tuesday, January 11, 2000, after the market
TMP Worldwide Declares 2:1 Stock Split.
Adding to the excitement of the long awaited Yahoo! split
announcement, Internet Giant TMP Worldwide Inc. (NASDAQ:TMPW)
announced that its Board of Directors approved a 2:1 split of
its outstanding common stock. The payable date has been set for
Feb 29th and the record date is Feb 16th. The announcement was
made at a price of $134.38 as prices began to come back from their
drop after New Year's.
TMP, headquartered in New York, is a global leader in
recruitment advertising agencies and has of the world's most
extensive search and selection companies. They are the world's
largest yellow page advertising agency and provider of direct
marketing services. In addition, the Company serves over 90% of
the fortune 100 and 500 companies.
TMP's chairman and CEO, stated, ``The decision to effect a stock
split at this time reflects our strong performance to-date, which
we believe has been driven largely by TMP's growing Internet
revenues. We feel this action has the potential to enhance the
liquidity of our stock and broaden ownership.''
There are about 40.2 million outstanding TMPW shares and a float
of 23.1 million. The company is currently authorized to issue as
many as 200 million shares. Daily trading volume looks healthy
at 484 thousand in the 3 month average but has dropped to 233
thousand in the 10 day. We will be monitoring these and other
characteristics of TMPW closely to recognize any trading
opportunities that may arise. Until then, please view our
As of Market Close - Tuesday, January 11, 2000
Broad Market Bearish/Bullish Last Posture/Since Alert
DOW Industrials 10,800 11,550 11,511 Neutral 1.04
SPX S&P 500 1,340 1,400 1,439 BULLISH 12.03
OEX S&P 100 700 750 785 BULLISH 12.03
RUT Russell 2000 430 450 493 BULLISH 11.12
NDX NASD 100 3,200 3,800 3,544 Neutral 1.06
MSH High Tech 1,650 1,900 1,821 Neutral 1.06
XCI Hardware 1,250 1,425 1,373 Neutral 1.06
CWX Software 1,210 1,420 1,305 Neutral 1.07
SOX Semiconductor 640 660 717 BULLISH 12.21
NWX Networking 820 900 853 Neutral 1.07
INX Internet 665 800 723 Neutral 1.06
BIX Banking 645 690 517 BEARISH 11.30
XBD Brokerage 410 450 419 Neutral 11.30
IUX Insurance 625 650 588 BEARISH 11.30
RLX Retail 900 935 988 BULLISH 11.23
DRG Drug 380 400 364 BEARISH 12.07
HCX Healthcare 760 790 738 BEARISH 12.07
XAL Airline 180 190 152 BEARISH 5.21
OIX Oil & Gas 280 315 292 Neutral 1.06
Sector Watch Alert
100-point swings on the Nasdaq are becoming a daily occurrence, as
the technology index closed down -128 today after making a nice
comeback from last week's sell-off. The Dow sold off near the end
of the day as well, after breaking a new all-time-high earlier in
the trading session. Losing sectors were abundant, and were led by
the Nasdaq 100 (-4.66%), Internet (-4.47%), Semiconductor (-3.32%),
and Software (-3.25%). There are no current changes in posture.
This section of the investment advisory website highlights
SplitTrader.com's stated Sector Watch across broad market indices
and industry sectors. SplitTrader.com is the only website that
states and regularly updates its Sector Watch across industry
sectors. Investors who reference this section first before
planning their trades will gain a decided advantage. The time
horizon of our stated Sector Watch is generally 2-3 weeks and is
based upon a number of fundamental, technical and sentiment
An important feature to our stated Sector Watch is the key
benchmark levels. These levels represent important near-term
support and resistance points. By viewing the sliding bar for
each index, investors can quickly view the relative strength of
our position and better anticipate when we are likely to change
our Sector Watch. These benchmarks are determined using technical
and sentiment indicators. It's important to realize that our
Sector Watch may be contrary to the overall trend when compared
to longer-term moving averages. This is because our stated Sector
Watch is designed to help investors take positions before others
see major trend reversals. For each sector, we highlight the index
symbol, key benchmarks, last level, stated Sector Watch and the
date we changed our position (since).
For industry sectors signaling BULLISH, investors may want to
consider long/call positions. For sectors signaling BEARISH,
investors may want to explore short/put positions. For sectors
flashing Neutral, investors may want to develop hedge positions.
As investors allocate capital, we encourage BULLISH traders to
pursue industry sectors that are trending higher and trading above
moving averages and BEARISH traders to pursue sectors trading
below declining moving averages. Investors can view these moving
averages over a six-month chart by double clicking on the industry
indexes links within the matrix.
Let's Keep Our Perspective on Things
By S.P. Brown
I doubt in the annals of modern journalism that the terms
"paradigm shift," "new convergence" and "one plus one equals
three" have been used to the extent they were used yesterday
to describe the proposed mega-merger of leading Internet
service provider America Online (AOL) and media conglomerate
Time Warner (TWX). When the deal was announced, journalists
near and far were so smitten by the prospect of these two
behemoths becoming one that few other cliches would come
readily to mind.
The PLAY LEGEND:
SplitTrader.com Play Recommendations.
Updates are just that - updates on continuing plays
New plays are brand new for the newsletter.
Closing plays are plays that we feel have lost the advantage.
You will see:
Stock Symbol, Company Name, Closing Price, (change for the week)
Picked at date and Change since picked
BoD = Board of Directors meeting
ADV = Average Daily Volume
dma = daily moving average
>>on the SplitTrader.com website we have very detailed profiles
for the stocks we play. Please take the time to visit the site
and look up a stock's profile if you are interested in more
KLAC - KLA-Tencor $115.56 -1.00 (-10.25)
Please see details in our play section.
Picked on Jan 6th @ $99.44
Change since picked +16.12
Chart = http://quote.yahoo.com/q?s=KLAC&d=3m
NEW SPLIT RUN PLAYS 01/11/00
ASYT - Asyst Technologies $79.13 -0.94 (+3.50)
Asyst Technologies makes factory automation, materials tracking
and isolation technology systems used in cleanrooms for
semiconductor manufacturing. Their products increase efficiency
and address cleanliness concerns for semiconductor manufacturers.
The stock was on a roll in 1999 and has only gained momentum in
2000. The Company announced a 2:1 stock split on Jan 3rd, payable
Feb 4th. They also said that earnings are expected to be $4
million better than expected, citing $63 million of revenue in
December. Wall Street was expecting only $54 million in revenue
during December. The news pushed ASYT up to $90 intra-day before
closing just above $80. Since then, ASYT has since fallen back to
$71, but is coming back strong. This stock has secured its share
price going into earnings and the split with the pre-release. The
actual earnings results are scheduled to be released on 1/19. They
are not going to miss the numbers. This will allow investors to
play the split with some degree of safety. Support is at $71 and
resistance is at $90. Use a bounce off of the 10-dma or a break
above $83 as an entry point.
Picked on Jan 11th @ $79.13
Change since picked +0.00
NEW SPLIT CANDIDATE PLAYS 01/11/00
CRA - Celera Genomics $223.50 -18.50 (+34.06)
Were it not for the AOL/Time Warner merger, Monday's headline
would have been about CRA. It's big news in itself - CRA is 90%
complete in its sequencing of the human genome and will be 100%
complete by the end of the year. CRA will hold patents on some
of the gene sequences discovered, requiring other companies to
pay for the right to develop gene therapies based on those
patents. Genomics has been the hot topic in the biotech industry
for a month and CRA established itself as the leader with
Monday's announcement. We have been monitoring this company for
an establishment over the $200 level to trigger a split
announcement. It's sister company PEB, announced a split in July
1999 when the stock was trading at $112. CRA has never split and
is due to announce. We anticipate an announcement by the Feb 1st
earnings release. As for entry levels, support is weak at $225,
strong at $200. Resistance is at $250. We expect considerable
volatility as this stock is trading like a high-flying Internet
stock so prepare for wide price swings.
Picked on Jan 11th @ $223.50
Change since picked 0.00
PEB - PE Biosystems $140.00 +1.00 (+17.00)
PEB and CRA are twins, but not identical. Both are biotech
companies under the PE Corporation umbrella. CRA is the sexier
of the two, attracting investors with industry leading
gene-sequencing research. PEB, on the other hand, is the salesman
of the family. The company develops and sells medical devices for
research, including genomics research. Both companies have
something in common: their stock prices are screaming higher.
PEB broke through resistance at the $123 level to challenge
$140 both Monday and Tuesday, on the strength of the CRA press
release. The company is likely to announce a split soon, as the
previous split announcement came during July 1999 when the stock
was trading at $112. We will follow CRA closely, as the stocks
will mirror each other as we approach the earnings date for both
companies on February 1st. Current support is at Monday's open
of $130, resistance the high of $150. Entries at or below $140
do have some support, but biotech stocks are in a period of high
volatility, so prepare for wide price swings.
Picked on Jan 11th @ $140.00
Change since picked 0.00
NT - Nortel Networks $98.38 -2.13 (+6.67)
NT has come back onto our radar screen as a split candidate and
has come back with a vengeance. In part, this is due to the recent
publicity they have received. Within the past three sessions, NT
has announced a major alliance with Sun Microsystems, been
upgraded by Warburg Dillan and Reed and benefited from Lucent's
recent pre-earnings warning, pushing NT's stock up over 27%. NT
has both reason and motive to split. Last August, NT split at a
pre-split adjusted price of $86, making NT's current price level
attractive for a split. NT is an ADR and has an unlimited amount
of authorized shares and as such is the case, are not limited by
the lack of shares available. In addition, they have an earnings
announcement fast approaching on 01/26/00, at which time we expect
a split to be announced. NT has been building up momentum over the
last few sessions and today's close was well above its 5,10 and
20-dma's. Look to find support at $95, with the first resistance
level at $105 and more lined up at $110. With momentum growing,
an intra-day retracement back to its 10 and 20-dma's ($95.80)
could offer a great entry point.
Picked on Jan 11th @ $98.38
Change since picked +0.00
SPLIT RUN PLAY UPDATES 01/11/00
BVF - Biovail Corporation $93.44 -2.50 (+0.50)
One would expect BVF to have had more of a downturn than what it
had today, given the way the broad markets traded down for the day.
With no news or new events, BVF had a light trading day. The
session began with BVF opening at $96.94, which also served as
the day's high. Trading volume fell well below normal, indicating
a lack of interest (not good-we want to see a volume spike above
the average daily volume of 309k to verify that stock has
momentum). The good to come out the day was the fact the stock
managed to close above its 5,10 and 20-dma's. Support seems to be
right at $92, just above the 5 and 10-dma. In terms of resistance,
expect it back at $96 as well as today's intraday high. Be sure to
have your stops ready at $87, in the event BVF takes an unforeseen
downturn. We expect to close our play out now later than the 18,
the day before the payable date.
Picked on Dec 30th @ $93.00
Change since picked +0.44
CHKP - Checkpoint Software Tech. Inc. $202.50 -9.25 (+10.63)
On Monday, CHKP opened with a surprise, announcing a new software
release. The stock rallied and closed more than 17 points higher.
Today, CHKP started the day lower, opening more than 8 points
below yesterday's close. Shares rallied mid-day, hitting an
intra-day high of $218.50, just 5 point shy of new 52-week high.
As the markets continued to trade lower, CHKP gave back all of its
gains to close one and a half points off the open. Despite today's
close, which saw the stock sell off over 8 points in the last five
minutes of trading, CHKP managed to close above the important
psychological level of $200 and well above its 5,10 and 20-dma's,
indicating the stock has some remaining momentum and room to grow.
Look for CHKP to continue its upward momentum before opening a new
position, although the current level is a good one for initiating
new positions. Keep in mind that the actual shareholder approval
for this split is set to occur at a shareholder's meeting this
Thursday (13th). The actual stock split (2:1) is set to be paid
out on the 28th of this month and we look to be out prior to that
date as is our normal policy.
Picked on Jan 4th @ $198.75
Change since picked +3.75
HGSI - Human Genome Sciences $164.81 -12.75 (+4.50)
Human Genome Sciences was helped by the news that Celera Genomics
(CRA) had successfully mapped 90% of the human genome. This
stunned many investors and set the entire sector on fire. HGSI
traded up to an all-time high of $190.50 before settling in just
above $177. Tuesday didn't work out so well. HGSI took back a
large portion of this week's gains as the biotech sector fell
victim to some profit taking. Volume has been surging, trading
4.5 x ADV on Tuesday, as more investors look to get some biotech
in their portfolio. The split is payable on 1/28 so there is a
chance that HGSI will consolidate before moving higher. Light
support has come in at $160 with stronger support at $140.
Resistance is at $190. If you are already in, put in stops under
$150 as protection. Confirm continued sector momentum on strong
volume before starting a new play. A bounce off of $150 or a break
through $170 might offer a good entry point.
Picked on Jan 6th @ 149.13
Change since picked +15.69
JDSU - JDS Uniphase $190.69 -9.69 (+10.75)
JDS Uniphase continues to move higher. On Monday, it hit a new all
time high of $210. Tuesday, it ran into some resistance and
actually traded down. It seems that $210 is the magic number on
the high side as it hit that price before the pullback. This is
the sign of a solid stock because it gave back very little
considering the size of the run-up. The earnings announcement
coming soon is scheduled for 1/27 but the split is not payable
until March 10th, so the stock may run now and then again when
we get closer to the pay date. Support is now at $180 and
stronger support is at $154 (the 20-dma). Resistance is at $210.
Set stops under $177 to protect gains. A break above $200 or a
bounce off of $180 both offer good entry points. Confirm upward
movement on strong volume before opening a new position.
Picked on Jan 4th @ 171.13
Change since picked +19.56
JNPR - Juniper Networks, Inc. $323.88 -1.63 (-1.00)
After two days of nice gains, JNPR tried for a third but our gains
were siphoned off by the broader market. Both the Nasdaq composite
and the Amex Networking index lost 3.2% on the day, while JNPR
declined only 0.5%. That does indicate good relative strength,
however, the final hour of trading in JNPR was indicative of
further selling as we open on Wednesday. The stock actually traded
to $346 intraday Tuesday, near resistance at $350. Our original
entry point near $335 looked like good support, but again the
stock traded to lower levels. Support is now sitting at the 5-dma
of $322.50, with more lined up at $320 and more still back at $310,
which is the 50-dma. We are now hoping for some renewed interest
as the payable date is Friday, the 14th. We will exit by
Thursday's close. Intraday price crests should be evaluated for
exit points on Wednesday and Thursday.
Picked on Dec 21st @ $334.00
Change since picked -10.13
KLAC - KLA-Tencor $115.56 -1.00 (+10.25)
Chip stocks continue to push for a rally. Monday, the
Philadelphia Semiconductor Index closed at yet another all-time
high, blowing through the 700-point level to close at 741. We
weren't surprised to see some retracement Tuesday, especially
given the broader market weakness. Semiconductor companies are
currently huddled in California at an industry conference, where
analysts are predicting 25% growth in revenues this year. KLAC
is now positioned for a strong split run as the industry has a
number of companies splitting in the coming week. The payable
date is January 18th and we will exit by the close on Monday the
17th. Current trading levels are wide, with support at $110 and
$108 (10-dma) and resistance at $120. The entire sector probably
got some help today as INTC was upgraded to a strong buy from
Credit Suisse First Boston. This was in addition to an upgrade
to a buy from Robertson Stephens on Monday. In addition, INTC
reports earnings on Thursday, which should give the sector a lift
if the numbers are good.
Picked on Dec 6th @ $99.44
Change since picked +16.12
MSTR - MircoStrategy Inc. $238.50 -12.75 (+28.13)
MSTR announced a partnership with Primark on Monday, driving its
stock price to a new all time high of $266. This gain was short
lived as today's markets pushed MSTR down to close at $238.50.
Though giving back much of Monday's gains, MSTR still managed to
close well above its 5,10 and 20-dma's. MSTR is not showing any
signs of letting up and could continue its run up to the split
date, if the markets permit. Watch for MSTR to find support at
the 5-dma ($222) which is the level it gapped up from on Monday.
There is more just above the 10-dma ($213) if the markets
continue downward. With more than 2 weeks left to the split date,
consider opening a new position if MSTR continues to show strength
by closing strongly on good volume of around 350k. If momentum
players stay in this stock, we should see a retest of the high set
on Monday. The split date for MSTR is January 26, 2000 and we
look to exit our position no late than the 25th of January.
Picked on Jan 4th @ $200.25
Change since picked +38.25
NVLS - Novellus Systems, Inc. $133.75 -4.81 (+8.88)
It's a stretch, but the semiconductor stocks put in a stellar
performance Monday after the AOL/Time Warner merger was announced.
The reason: the merger is another confirmation that cable broadband
is the future of Internet connectivity. Broadband chipmakers have
been the star players in the semiconductor industry lately. NVLS,
a chip equipment company, also ran on the news. The chip stocks
gave back about 50% of Mondays gains, but that was to be expected
in Tuesday's market retracement. Tuesday's trading was bolstered
by industry leader INTC, which received an analyst upgrade. The
stock is now trading far above its 5 and 10 day moving averages,
so support is way below current levels. NVLS is now less than a
week away from its Monday, January 15th payable date. We are set
for an exit by Friday's close. Current price levels offer only a
high-risk entry, but traders already in are enjoying a nice gain
while the stock is positioned to challenge resistance at $140.
Retracement to first support levels is at $125.
Picked on Jan 4th @ $122.12
Change since picked +11.63
ORCL - Oracle, Corp $112.38 -3.38 (+9.00)
The NASDAQ market started out on a negative note and became
progressively worse as the day wore on, culminating in a loss of
126.68 points for the day. We think ORCL was quite resilient in
managing a minimal loss of $3.38 for the day. Even with the
slight loss, the shares closed well above the 5, 10, and 20-day
moving averages. ORCL had a good run up the past two days
recapturing most of the losses sustained last week. There is
intraday support at $110.00 and again around $112.00. Resistance
is at $114.75, the high for the day. As far as plays, we like
the stock at its current price, however, we would urge extreme
caution due to the volatility of this stock and the close
proximity of the stock split date. As is our policy, we would
suggest your close this position no later than January 17th, a
day before the split payable date to avoid profit taking.
Picked on Dec. 28th @ $108.13
Change since picked +4.25
PCS - Sprint PCS Group $97.63 +1.44 (+5.82)
Sprint PCS bounced back nicely this week. There was some positive
press concerning insider selling of PCS by Cox Communications (COX).
The story revealed that they sold 5 million shares in order to
finance some COX acquisitions, not because of a lack of confidence.
It further stated that COX was holding 73 million shares of PCS.
This may relieve investors because the selling is over for now
and the sales will no longer weigh on the stock. Volume remains
steady and PCS appears to be on the rise as it broke above the
5-dma on Monday. The 2:1 split is payable on 2/17, so there is
still time left on this play. Earnings are scheduled for 2/1 and
may provide additional momentum into the split. Set stops in under
$90 to prevent losses. Support is at $95 with firm support at $90.
Resistance is at $105. Use a bounce off of $95 or a break above
the 20-dma at $99.78 in a positive market for an entry point.
Picked on Jan 6th @ $94.44
Change since picked +3.19
TMX - TELEFONOS DE MEXICO $114.19 -2.44 (+6.06)
TMX moved nicely in the right direction Monday, gaining more than
8 points and pushing TMX to a 52-week high. Not to be out done,
TMX continued its run today, hitting a new 52-week high of $119
before losing ground to the market. Despite the selloff today,
there is a factor that could help TMX in Wednesday's trading.
Two news articles came out after Tuesday's market close that
should positively influence trading. The first involved a court
decision in favor of TMX, which would limit the implementation of
long-awaited rules to curb the market dominance of TMX. The
second centered around a positive statement from Mark Mobius, a
fund manager from Templeton Funds, who favors the telecom sector
as ``a safe way into Internet and a whole revolution.'' Tuesday's
close was just under $115, which has proven to be a formidable
resistance level. Consider continued price appreciation with
strong supporting volume before entering into a new position.
Support is sitting back at $108, with strong support at $104.
You might want to consider a stop under $100 to reduce risk if
TMX should trend downward. The TMX stock split is payable on the
1st of February and we are targeting the 31st of January as the
latest date for our exit. As this stock is interest rate
sensitive, the reports (PPI and CPI) due out later this week are
our likely to have an affect, be it positive or negative. If the
interest rate environment breaks down more over the coming days
or weeks, we will probably be forced to exit this play much sooner
than the end of January.
Picked on Jan 9th @ $108.13
Change since picked +6.06
SPLIT CANDIDATE PLAY UPDATES 01/11/00
ADI - Analog Devices $90.56 -3.88 (+3.69)
Analog Devices was hot on Monday. The stock opened up at $90 and
traded to a new intra-day high before closing out at 94 7/16.
Tuesday, it gave back almost 4 points despite a positive write-up
from CS First Boston. The up trend remains in tact with the stock
sitting just above the 5-dma. Volume was heavy on Monday but it
was very light on Tuesday. This shows that investors are buying
this stock when it is up, and not selling when it pulls back. ADI
is trading on sector momentum more than anything else right now
and the sector was tanking on Tuesday. We are hoping for a split
either at the BoD meeting or when they announce earnings in March.
Support is looking like $88 on top of stronger support at $84.
Firm resistance is now at $95. Set stops just under $84 to protect
yourself in the event of more downward pressure. If you are looking
for an entry point, look for positive market direction and wait for
ADI to bounce off of $88 support level or break above the $95
resistance level. Only play in a rising market.
Picked on Dec 17th @ $79.00
Change since picked +11.56
AFFX - Affymetrix, Inc. $170.06 -22.81 (+16.81)
You gotta love the biotechs, especially if you are holding a stock
like AFFX. A fourth straight up day in the sector was marked when
Celera Genomics (CRA - see our new play) announced that they had
mapped at least 90% of the human gene string. AFFX jumped sharply
on the news, as the company manufactures the "GeneChip" system
that analyzes gene sequences on disposable chips. We don't claim
to know what this means, but a complete gene sequencing of the
human body is believed to yield more effective drugs and gene
therapies for treating disease. Traders are placing bets on
second and third tier companies, hoping that some will be winners.
Speaking technically in the investing sense, the biotech index
lost nearly 5% Tuesday, but that was expected following a 22% gain
since the close on January 4th. AFFX now is at support of $170,
with the 10-dma only 4 points below. Monday's close near $193 is
the all-time high for the stock. Resistance is now the $200 level.
Still looking for a split announcement with earnings on or around
the 25th of January.
Picked on Jan 9th @ $153.25
Change since picked +16.81
AMAT - Applied Materials $120.81 -5.56 (+3.88)
Applied Materials is on the mend. After a 3-day slide, the stock
rallied back on Monday and came very close to making a new high.
Tuesday, the market was down, semiconductor issues were down,
therefore, AMAT was down too. CS First Boston spoke kindly about
AMAT in a report on semiconductor stocks released Tuesday morning,
but it did not have the force to keep the sector up. Volume has
been average and there may me some more consolidation in the
$110-$130 range until Intel (INTC) announces earnings on 1/13
after the bell. This should drive the stock out, one way or
another. AMAT is expected to announce earnings on 2/16 and we
are hoping for a 2:1 split announcement to come out with the
earnings release. Support is holding at $120 with strong
support at $110. Resistance is at $130. Confirm sector momentum
and market direction before opening a new position.
Picked on Jan 9th @ 116.94
Change since picked +3.88
BVSN - BroadVision $141.06 -20.94 (-7.28)
BVSN did not fare well today after the NASDAQ dropped 3.17%.
Opening up at $161.38, BVSN quickly began a steady progression
downward to close at $141.06. As stated before, BVSN closely
follows the NASDAQ and generally goes the same direction, but
with more intensity. Today's move further illustrates this. The
upside is that this recent downturn could offer another
opportunity to open a new position. If the markets continue
downward, look for BVSN to find support at around the $130 level.
It bounced off this level last Friday. In addition, $130 was a
significant resistance level throughout much of the middle part
of December, so it should now offer some support. In reality,
you should get some support just below the current level at
$140. Resistance will come into play at $150 (20-dma) and again
at around $162 (10-dma). If we break this level intra-day, BVSN
could continue to rally to new highs. As we approach earnings, due
out on 1/26 (unconfirmed), this play should start to heat up,
offering the chance at some upside appreciation. Prior to opening
new positions, be sure to watch the general markets for overall
direction. We are looking to hold this position no longer than
the 25th of January, the day before earnings, to avoid profit
taking that might set in due to the earnings announcement. We
anticipate that the Company will announce a split with the release
of their earnings.
Picked on Dec 28th @ $163.13
Change since picked -22.07
CSCO - Cisco Systems, Inc. $106.50 -3.31 (+0.63)
We were oh-so close to breaking the $110 barrier Tuesday. Trading
volume was high, but tapered off as the stock appeared to lack the
muster to push through resistance. Volume did pick up as the
stock traded lower to support as it neared the $105 level and
bounced back. In recent news, CSCO announced the introduction of
CiscoWorks Windows 5.0 on Monday, designed to monitor live network
information. Tuesday, Equant announced that CSCO will provide
networking service to 50 countries used in Equant's data network.
Neither piece of news impacted the stock much, as CSCO is
currently trading with the market. Our expected split
announcement by February 8th is still weeks away. For now entry
points below $105 have excellent support. Resistance is at $110.
Picked on Jan 9th @ $105.88
Change since picked +0.63
EPNY - E.piphany $161.94 -19.31 (+5.44)
E.piphany surprised us on Monday with an SEC filing that contained
their earnings release. They also surprised analysts with a much
smaller than expected loss and 500% revenue growth. The stock flew
on the news, sending EPNY up to $183 intra-day. They did not
announce a split, however, there is still a possibility that they
will at their next BoD meeting. Tuesday, the stock started in
positive territory before the market sold off. In the mean time,
the stock has moved up 5 points on the week and may get a boost
from Ariba (ARBA) tomorrow since they are somewhat related. EPNY
is extremely volatile and can move quickly in either direction so
place a stop just under the 5-dma at $155 to protect yourself from
taking a big loss. Support is at $155 and resistance is at $200.
Confirm positive movement above $165 or a strong bounce off of
$155 on heavy volume to open a new position.
Picked on Jan 6th @ $159.63
Change since picked +2.31
MUSE - Micromuse $163.50 -23.00 (-1.63)
Another all time high for Micromuse. Unfortunately, it didn't hold
up for long. As stated here on Sunday, we were not confident in
MUSE at this level and we wanted it to come down. Hopefully you
listened. It came down hard on Tuesday, closing at its intra-day
low. This stock usually has a difficult time rallying in a
negative market and it was true to form this week. Earnings are
due out on 1/19 after the bell (when we expect the split
announcement), which is just 8 days from now. MUSE is highly
volatile and moves in wide ranges so there may be some more
opportunities to get in before the earnings release. Look for a
bounce off of the 20-dma at $153 in an upward market as a good
entry point. Support remains at $150 while resistance is up to
Picked on Jan 9th @ $165.13
Change since picked -1.63
NOK - Nokia $170.00 -8.94 (-3.00)
Electog and NOK agreed today that Elcoteg would acquire NOK's
monitor manufacturing units in Pecs, Hungary. At the same time,
NOK has decided to discontinue its display manufacturing and will
now focus on new product development in its newly formed NOK
Display Applications Venture. NOK was one of the star-studded
technology and content companies that Vodafone AirTouch PLC
announced it was utilizing to launch a single global platform
and portal for mobile data and the Internet in July of 2000.
The positive news was to no avail, as NOK got caught in the
whirlwind of the Nasdaq market and was not released until it
suffered a loss of $8.94 for the day. NOK has been on a real
roller coaster ride, up one day, down the next and then back up.
In true roller coaster fashion, NOK, during the past two weeks,
has closed as low as $153.00 and as high as $191.00. If the
market stabilizes and confirms an upward trend, we believe NOK
has plenty of room for appreciation. There was intraday
resistance at $172.00 (10-dma of $175.50) and again at $176.00
(the high for the day). NOK showed intraday support at $164.00
(5-dma of $168.19) before rebounding and closing the day at
$170.00 (also intraday support). We continue to like the stock
at this price, however, we would like for the stock to close
above the level of $180.00 (the real test) before recommending
any new plays. As mentioned in our previous updates, we expect
NOK to declare a stock split during its earnings announcement
around 01/20(unconfirmed). Presently, the market and the stock
are very volatile, so implementing stops to protect profits
would be judicious.
Picked on Dec 2nd @ $144.63
Change since picked +25.37
QCOM - Qualcomm $144.44 -14.94 (-5.56)
On Monday, Qualcomm and Hitachi (HIT) announced a joint venture on
a wireless non-voice communications system called High Data Rate,
or HDR. QCOM is still working off a huge split run and a 400%
increase in shares outstanding. The ADV is telegraphing this
action as the volume has not settled down since the split. The
problem with QCOM right now is that momentum players dominate this
stock and they let it fly in a positive market but they also crush
it in a weak market. Both of these conditions are short-term and as
we move closer to earnings on 1/25 (confirmed with Company), we
should see a much stronger QCOM. Going forward, the stock may dip
back to $136 for a re-test of the 20-dma. Set stops under $135 to
prevent further losses. Support is now at $140 while resistance
remains at $200. Confirm upward momentum and market direction
before entering a new play because QCOM is 99.9% momentum driven.
Picked on Jan 4th @ $162.06
Change since picked -17.63
STM - ST Microelectronics N.V. $139.75 -3.88 (+8.63)
ST Microelectronics got a small nod from CS First Boston in a
report on the semiconductor sector on Tuesday. The news could not
keep the stock in positive territory and STM finished the day
down almost 4 points. The stock is just starting to come back
from a harsh round of selling last week. You have to expect these
kinds of minor pullbacks, especially when the NASDAQ is getting
pounded. They are expected to announce earnings on 1/20 before
the bell, and we are hoping for a split announcement to come out
with earnings. Right now, STM is sitting just above its 5-dma and
could turn back to $120 before moving up again. Support is at $132
with strong support at $120. Resistance is at $160. Set stops under
support to lock in gains. Look for an entry point on a move above
$145 or a bounce off of the $130-135 level. Confirm market
direction and sector momentum before starting a new play.
Picked on Jan 9th @ 131.13
Change since picked +8.63
SPLIT RUN PLAY DROPS 01/11/00
SPLIT CANDIDATE PLAY DROPS 01/11/00
CMRC - Commerce One $184.00 -14.75 (-3.50)
Traders just can't find enough reason to push CMRC higher right
now. With another 2.3 million shares coming out of lockup on
January 15th, the stock broke through support the $190 support
level at Tuesday's close. CMRC actually held up well in last
week's market selloff, but current downside outweighs upside.
We will exit this play for now and consider new entry points
after support has been established.
Picked on Jan 4th @ $218.50
Profit/Loss -34.50 (-16%)
Best Profit +1.75 (+0.8%)
CTXS - Citrix Systems, Inc. $115.00 -9.31 (+3.38)
CTXS is now languishing in spite of good company fundamentals.
With no recent news to drive the stock, the momentum traders have
gone elsewhere. CTXS could jump dramatically if a split is
announced, but the stock has not been able to break the $130
resistance level in repeated attempts. Support has been
established at $115, however, the stock is following the software
index and broader market. Given the current volatility in the
market, CTXS will be subject to price swings. Near term
resistance has been formed at $120 - $125. Reliable support is
all the way back to $100. In other words, although a split
announcement is still likely, the near-term downside is greater
than upside potential. We will drop this play for now and
evaluate the stock for possible re-entry points.
Picked on Dec 5th @ $100.44
Profit/Loss +14.56 (+15%)
Best Profit +30.06 (+30%)
KANA - Kana Communications, Inc. $216.00 +19.00 (+24.88)
Another candidate play victory! Only 3 days after we picked this
play, KANA rewarded us with a split announcement and a nice gain
to boot. We were a little surprised that KANA didn't wait for
earnings, but we did expect an announcement as the stock had
established a base at the $200 level. Like we said, this stock
has the potential for explosive volatility, so we may soon re-add
the stock as a split run play. For now, we will drop KANA due to
the likelihood for some near-term retracement. Note that we have
used $230 to compute our best profit, using that level as a
natural stop. The play actually had a maximum profit of over
$41.00 as the stock traded up to $243.50. Although we're not
long-term stock pickers, this play developed quickly even by our
standards. That's a short-term use of capital at it's best!
Picked on Jan 6th @ $202.12
Profit/Loss +13.88 (+7%)
Best Profit +27.88 (+14%)
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