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Email Version, Section 1, Wednesday, 01/12/2000
The SplitTrader.com Newsletter         Wednesday 01/12/2000 1 of 1
Copyright 2000, All rights reserved.  
Redistribution in any form is strictly prohibited.  

 - Your World Leader for Trading Stock Splits on the Internet - 

Posted online for members at: http://www.SplitTrader.com

The entire newsletter is best viewed in COURIER 10 for alignment
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In This Newsletter:
===================

Market Commentary - Violent Swings!
Split Announcements - RAZF 
Editorial - The Earnings Game: Whisper Numbers Beat Published 
		Estimates
Play-of-the-Day - NVLS 

================================================================

Market Commentary
=================

Violent Swings!

Trust busters are talking of breaking up Microsoft.  Yahoo led 
the Internet stocks lower.  These were big stories but neither 
drove the market today.  Market patterns established since the 
first week of January drove Wednesday's trading.  Cyclical 
stocks, utilities, autos and banking stocks continue to advance.  
Although individual investors remain focused on the technology 
issues, the blue chips are attracting institutional money at the 
expense of the tech stocks.  In addition to valuation worries in 
the tech sector, the DOW has a better track record during the 
first quarter than does the Nasdaq Composite.  The DOW industrials 
have posted solid gains during both January and February every 
year since 1995.  The Nasdaq has only two years of consecutive 
strong first quarters.  Concern that the Nasdaq Composite is still 
in a corrective phase haunt the tech sector, making volatility 
extreme.  Wednesday marked the eighth consecutive day that the 
composite traded in a 100 plus point range.  We are in the midst 
of a convergence of two factors that create market volatility - 
earnings season and a rising interest rate environment.  Until we 
pass through earnings, expect more of the same - a flight to 
safety in the DOW and momentum driven swings in the tech stocks. 

The DOW continues to trade higher, led by banking stocks and 
utilities.  The industrials gained 40 points to close at 11551.  
Volume on the NYSE was heavy at 974 million shares.  Decliners 
led advancers 17 to 14.  There were 50 new highs to 84 new lows 
Wednesday.  Leaders in the DOW 30 included GM +3.44, T +2.81, HWP 
+3.81, JPM +2.06, and INTC +1.56.  Losers included EK -1.81, MSFT 
-3.63, SBC -2.12 and DIS -2.75.  On the broader market, AOL and 
TWX continue lower after their merger announcement, down 4.12 and 
6.38 points, respectively.  Other notable losers were in the 
biotech industry, retracing for a second day after four straight 
days of huge gains.  Biotech losses were led by PEB -15.81 and 
DNA -14.19.

Nasdaq composite stocks continued another day of 100-point price 
swings as the market seeks direction.  YHOO led the Internet 
stocks as the biggest losers on the day.  Also declining sharply 
were software stocks and the biotechs.  The semiconductor 
companies continued their advance.  The composite gave back 71 
points to close at 3850.  Volume was heavy at 1.5 billion shares 
traded. Decliners led advancers 23 to 18.  Notable leaders were 
in the chip stocks, including BRCM + 16.5, RBAK +10.06, NVLS 
+7.63 and AMAT +6.06.  Big losers were once again the high 
flying Internet companies, including YHOO -39.81, CMRC -27.44, 
KANA -26.00, AKAM -24.44, FMKT -20.12.

The broader markets finished marginally lower as individual 
sectors traded mixed.  The S&P 500 finished off 0.52% and the 
Russell 2000 index lost 0.43%.  Advancing sectors were led by the 
Philadelphia Semiconductor Index +3.4% and the KBW Bank Sector 
Index +2.0%.  Losing groups included the CBOE Internet Index -5.18% 
and the Amex Biotechnology Index -4.36%. 

The bond yield is now nearing the 6.75% threshold with today's 
close at 6.71%.  Go back to August 1997 to find levels this high.  
The bond yield continues to increase due to interest rate worries 
and a huge supply of corporate debt offerings competing for money 
flows.  The equity market continues its disconnect from current 
rates, for now.  

Following tradition, YHOO sold off with impunity after earnings 
were released at Tuesday's close.  Even a 2:1 split announcement 
was not enough to prevent the stock's traditional post-earnings 
selloff as the company warned of revenue growth rates that are 
not sustainable. Today's trading was exaggerated by selling that 
began in Tuesday's market.  Traders were additionally disappointed 
that the $0.19 EPS did not beat the whisper number and many had 
hoped for a 3:1 split.  Despite the selloff, analysts rushed to 
raise their price targets, most of which are now placed at $450 
to $550.  A notable exception was CSFB analyst Lise Buyer who 
stated "We are still challenged trying to apply fundamental 
analysis to this valuation".  Yahoo lost 39.81 points to close 
at $357.56.  Additionally, YHOO continues to deny reports that 
they are shopping for merger opportunities in the wake of the 
AOL/TWX merger.

A published report in USA today sent Microsoft shares lower.  
According to unnamed Justice Department sources, the report said 
federal prosecutors in the antitrust case have reached a consensus 
that MSFT should be split into two to three separate entities.  
The most likely scenario, according to the article, was a split 
along product lines, with one company producing the operating 
system and the remaining products to be controlled separately.  
Justice Department officials denied the rumors, but the stock 
sold off anyway, down $3.63 to close at $105.81.

Broadband stocks continue to rise on the heels of the AOL/Time 
Warner merger news.  The deal signals a belief that the next 
generation of Internet connectivity will be through cable 
broadband.  BRCM gained $16.50 on the day.  Recent analyst 
upgrades from Prudential, SG Cowen and C.E. Unterberg Towbin sent 
shares of ADAP $8.62 higher to close at $93.19 Wednesday.

AMAT announced the acquisition of ETEC after the close Wednesday.  
The purchase will combine the world's largest semiconductor 
equipment company with the leading manufacturer of mask pattern 
generation for the semiconductor and electronics industries.  Both 
companies traded higher before the announcement.  AMAT gained 6.25 
points, closing at $127.06.  ETEC gained 7.31 points to close at 
$49.88.  In after market trading, ETEC was up another 25 points.

Earnings reports for Thursday include a number of big names 
capable of moving the market.  Set to release before the market 
is chip equipment maker KLAC.  Scheduled after the close Thursday 
are chip leader INTC, software maker SILK, networking stock ZOOX 
and biotech company BGEN.  As mentioned earlier, INTC traded up 
strong today, helping to lead the entire semiconductor sector 
higher.  In large part this is due to the normal run-up the stock 
sees going into earnings.  There is a consensus belief that they 
will meet and maybe beat expectations this time around, which is 
a departure from the last two quarters.  Despite this, there is 
also a fear that even a good number is priced in and that traders 
will sell the stock in front of the afternoon announcement, which 
in turn might drive all the semi's down.  

Lined up both Thursday and Friday are significant events, likely 
to keep the wild price swings in place.  Initial trading activity 
will focus on the PPI numbers, to be released Thursday morning 
before the market opens.  Earnings reports from several market 
leaders are due Thursday after the close of trading, followed by 
an Alan Greenspan speech Thursday evening.  If that weren't enough, 
on Friday morning the CPI numbers will be released just as 
analysts are deciphering what Uncle Al said the night before.  
There is a great likelihood that anything short of decisive 
reports will be followed by additional market volatility.  Lets 
face it, the markets are looking for direction right now, thus 
the violent price swings.  Even bad news (in the form of a PPI 
and / or CPI number's release pointing to inflation) would be 
welcomed in the sense that it provided traders with some sort of 
bias and market direction.  Overly positive numbers would be more 
welcomed and might in fact offer the possibility of a "relief 
rally".  That scenario is a bit of a stretch at this point.  Even 
if it occurs, it would probably not happen until after the CPI is 
released on Friday.  If we get numbers that "leave us hanging", 
the violent swings are likely to continue as traders try to 
determine whether to make the move back to the high tech stocks 
they seem to really want to own, or instead continue to rotate 
into the cyclicals for some safe harbor.  It goes without saying 
at this point, but we do want to urge you to use discretion in 
initiating positions over the next couple days until the markets 
provide some sort of overall direction.  Otherwise, if the violent 
swings continue, use those stops!

Steve Pekarek
-Research Analyst 

===================
Split Announcements
===================

Wednesday, January 12, 2000, before the bell

Strategic consultant Razorfish to issue first stock split

Razorfish, Inc. (Nasdaq:RAZF) came out this morning to announce 
that its Board of Directors had approved a 2:1 stock split of the 
outstanding common shares for the Company.  The record date for 
the split is January 20, 2000.  The Company's transfer agent will 
distribute the additional shares on January 27, 2000.  

Razorfish is a US based strategic consultant to international 
companies.  The Company, founded in 1995, is responsible for 
helping client companies by designing digital communication 
solutions that "help companies invent and reinvent themselves."  
They design the information architecture, as well as the 
necessary customized software to implement their solutions.  
Their clientele includes companies like Charles Schwab, Nissan 
and Ericsson.  The Company IPO'd this past April (27th) at $16 
per share.  Razorfish has 200 million shares authorized and will 
have approximately 90.2 million shares issued and outstanding 
after the split.  Today's split announcement marks the first split 
of the Company's shares.

Shareholders of RAZF have seen a dramatic rise in share value over 
the last 3 months, as the stock broke through tough resistance at 
$40 per share and went on to trade to the recent high of $99.  
With over a half million shares trading hands on an average daily 
basis, this stock has attracted the attention of momentum investors 
on Wall Street.  We have been anticipating an announcement out of 
the Company for the last month, having added them to our Split 
Candidates List in December.  We anticipate that the split 
announcement will generate the needed enthusiasm necessary for a 
successful split run and will look to add the stock to our 
Recommended Split List in the very near future.  Please check 
back shortly to view a complete profile of RAZF.


=========
Editorial
=========


The Earnings Game: Whisper Numbers Beat Published Estimates
By Cindy Christ

America's raging love affair with game shows like "Greed" and
"Who Wants To Be A Millionaire" has come to Wall Street.

For the complete article go to:
http://members.splittrader.com/editorials/011200_1.asp


===============
PLAY-OF-THE-DAY
===============


NVLS - Novellus Systems, Inc. $141.31 +7.56 (+16.43) 

Sunday's Write Up:

The Nasdaq found it's footing just in time to save NVLS from 
having to retrace violently to catch up.  What we mean is, NVLS 
showed great relative strength during the market selloff and 
couldn't have held up much longer.  Early Friday, NVLS showed 
signs of weakening as it traded below support at $117, all the 
way down to $114.75. When the market did bounce back strong 
Friday, NVLS surged 6% higher on the day, with a great final 
half-hour performance in which the stock picked-up an extra 3 
points to close at a new daily high.  Our support is now at 
$120 (10-dma at $120.57), then $117.  Resistance is $125, then the 
all-time intraday high of $128.  This week two major chip firms 
report earnings, VTSS on Monday and AMCC on Thursday, both after 
the close. The general market will be impacted by both set of 
earnings, as well as the PPI and CPI reports late in the week, 
so watch for continued volatility.  We look to exit prior to the 
payable date on the 18th of Jan.

Tuesday's Update:

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 18th 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.

Wednesday's Comment:

The stock performed very well today, in large part due to the 
momentum the entire semiconductor industry has experienced since 
the SOX broke back above the 700 level on Monday.  Much of the 
sector strength can be attributed to INTC, who reports tomorrow 
after the market.  As for the Company, on Wednesday they received 
a price target upgrade from the semiconductor analyst over at ABN 
Amro, who upped his price target to $180 from $165.  The analyst 
also increased his estimate for growth in 2000 from 28% to 35%.  
This news is in addition to the fact that the stock is in the 
final stretch of its split and earnings run, with the payable date 
for the split set for this Monday (18th), the same day the Company 
is scheduled to release earnings.  Regarding entering a new play 
in NVLS tomorrow, we suggest that you look to see which way the 
market starts, based on the Retail Sales and PPI numbers.  If the 
market does look positive in the morning, look to open on any dip.  
If the stock does retrace, the 5-dma ($131) looks like a good level, 
otherwise, the real support is back at $120.  The stock set an 
intraday high yesterday ($145.63) and today's close represents a 
closing record.  With that being the case, there is no overhead 
resistance, so this stock may very well run in an up market 
tomorrow.  Once again, we do caution that you confirm positive 
market direction prior to initiating positions and be aware of 
the fact that INTC may sell off in advance of the earnings 
release, in which case the entire sector is likely to sell off 
as well.     

Picked on Jan 4th @ $122.12
Change since picked +19.19

Chart = http://quote.yahoo.com/q?s=NVLS&d=3m


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DISCLAIMER
==========

This newsletter is a publication dedicated to the education 
of online stock traders. The newsletter is an information 
service only. The information provided herein is not to be 
construed as an offer to buy or sell securities of any kind. 
The newsletter picks are not to be considered a recommendation 
of any stock but an information resource to aid the investor 
in making an informed decision regarding how to trade stock
splits. It is possible at this or some subsequent date, the 
editors and staff of SplitTrader.com may own, buy or sell 
securities presented. All investors should consult a qualified 
professional before trading in any security. The information 
provided has been obtained from sources deemed reliable but is 
not guaranteed as to accuracy or completeness.  SplitTrader.com 
staff makes every effort to provide timely information to its 
subscribers but cannot guarantee specific delivery times due 
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