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Email Version, Section 1, Sunday 02/25/01
The Newsletter         Sunday 02/25/2001 1 of 2
Copyright 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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

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In This Newsletter:

Market Stats
Market Commentary - So Much For Support
Definition of the Day
Friday's Split Announcements - None
Mondays Expirations
Event Calendar - Next Week's Economic reports
Upcoming Splits for next two weeks
Successful Announcements - Last Week
New Candidates List
Expected/Likely Announcements for the Coming Week


Market Stats For the Week

Index                     Close    Change    Support   Resistance

DJIA (INDU)           10,439.87   -359.95     10,350       11,000
Nasdaq (COMPX)         2,260.11   -165.36      2,000        2,700
S&P 500 (SPX)          1,245.47   - 56.08      1,200        1,400
Russell 2000 (RUT)       477.44   - 21.84        460          508
PHLX Semi (SOX)          608.34   - 53.05        530          800

Market Commentary

So Much For Support

To say equity markets have performed miserably over the past week
is to say Tony Stewart had a minor fender-bender in last Sunday's
Daytona 500.  If you'll remember, Stewart was the driver who took
out half the field during his spectacular crash on lap 176.
Among those drivers relegated to spectator status thanks to
Stewart's aerial acrobatics were perennial race favorites Jeff
Gordon and Dale Jarrett. (Needless to say, Stewart et al. could
be considered lucky in light of the tragedy that occurred on lap

Along the same line, sellers relegated many traders to spectator
status this week, and, in doing so, also took out two favorite
support levels -- 2,251 and 10,500.

On Thursday, the Nasdaq Composite Index (COMPX) closed at
2,244.96, putting the tech-heavy index at levels not seen since
January 1999.  More importantly to technicians, though, this
freefall wiped out supposed support at the January 3, 2001 intra-
day low of 2,251.71.

After Thursday's mass tech exodus, many pundits starting calling
for 2,000, which seemed inevitable on Friday after the index
dipped to an intra-day low of 2,156.29.  The COMPX was pressured
during the first few hours of trading by Sun Microsystems
(Nasdaq:SUNW).  The Internet server giant warned after the close
Thursday that its third-quarter earnings-per-share and revenue
would fall short of Wall Street's expectations.  EPS is now seen
at $0.07 to $0.09 vs. the First Call estimate for $0.15.  And
revenue, seen at $4.4 to $4.5 billion, will significantly miss
the previous goal of $5.3 billion.  Sun dipped to an intra-day
low of $19.44, a price not seen since July 1999, before rallying
late in the session to close flat at $20.81.

Like Sun, the COMPX rallied during the afternoon hours to close
up 17.55 points, or 0.78 percent, to 2,262.51, marking the only
time last week the index finished in the black.  But then again,
all this is pretty much irrelevant to a lot of investors,
especially those who have taken a beating in the COMPX, which is
down 55 percent from its March 2000 high of 5,132 -- a bear
market by nearly everyone's definition.

Friday's tech rally was initiated by former Federal Reserve
Governor Wayne Angell, who said that he thought there was a 60
percent chance for a 50-basis point reduction in the fed funds
rate this week.  The prospect of lower borrowing cost sent the
COMPX's largest components higher for the day:  Microsoft
(Nasdaq:MSFT), Intel (Nasdaq:INTC) and Cisco Systems
(Nasdaq:CSCO) all finished the day on higher ground.

I'm not so sure tech traders should get too excited over the
prospect of an intra-FOMC meeting interest rate cut, though.  The
fact is, many big-cap tech issues are still trading at multiples
that are 1.5 times to twice the market P/E of 25.  Sun, for
example, is still trading at a forward P/E of 50 based on lowered

This, in turn, could mean the COMPX is going lower (at least
according to some talking heads).  The index has been mired in a
downward trading channel that dates back to late August 2000.
What's more, many technicians believe 2,000 is the next
legitimate support level (if there is such a thing).

Chart of the NASDAQ Composite:

The other notable support level removed last week was on the Dow
Jones Industrial Average (INDU).  The Old Economy barometer was
supposed to stand firm at 10,500 (that is, after it was supposed
to stand firm at 10,750).

Chart of the Dow Jones Industrial Average:

To be sure, the INDU was nearly everyone's redheaded stepchild,
as it lost 359 points, or 3.5 percent, for the week.  But it
could have been much worse.  On Friday, the INDU tanked over 232
points, trading to an intra-day low of 10,294.01 (support at
10,300?) before recovering to close down 84.91 points, or 0.81
percent, to 10,441.90.  Like the COMPX, the INDU rallied late in
the session on Angell's Fed prognostication.

Still, despite last week's whipping, the blue-chip average is
down only 11 percent from its January 2000 high of 11,750.

So, with the COMPX down 55 percent and the INDU down 11 percent,
does this mean we are sitting in the midst of a genuine bear

Actually, many market watchers turn to the broader-based S&P 500
Index (SPX) as the final arbiter on such matters, and, according
to this measure, we are darn close.  In early trading on Friday,
the SPX traded down to 1,215.44, passing 1,221.96, which
represents a 20 percent decline from the March 2000 closing high
of 1,527.  But then, confounding the bears, the SPX recovered to
close at 1,245.72, down 6.96 points, or 0.57 percent, for the
day.  As of Friday's close, the SPX is off 18.4 percent from its
all-time closing high and only 23 points shy of closing in
official bear-market territory.

Turning to stock news on Friday, Motorola (NYSE:MOT) lost $1.04
to $16.25 after saying it could have a loss in the first quarter
if the slowdown in the economy continues.  This time last year,
Motorola was tipping the beams at $61.54

Also losing ground on Friday was International Business Machines
(NYSE:IBM), which fell $4.90 to $104 after Salomon Smith Barney
analyst John Jones cut his 2001 and 2002 earnings estimates and
his 12-month forecast on the computer giant's shares to $135 from

The most notable loser for the day was wireless communications
services provider Qualcomm (Nasdaq:QCOM).  The company lost $5.13
on Friday to close at $61.81.  For the week, though, Qualcomm
jettisoned $18.81, or 23 percent, of its value.  Don't be
surprised if you see more selling in Qualcomm over the coming
months.  The company still sports a triple-digit P/E ratio, so
you could very well be looking at a sell-off on par with Cisco or
Sun, or even Puma Technologies (Nasdaq:PUMA), before the stock
even faintly resembles current market multiples.

As for economic news, there little of significance released on
Friday.  Looking ahead, the economic news is relatively
lightweight fare compared to last week's economic news, but it's
still worth noting.

On Tuesday, durable goods orders for January are expected to have
dropped 2.5 percent, off sharply from a 2.2 percent increase in

On Wednesday, Fed Chairman Alan Greenspan will speak to the House
Financial Services Committee.  Look for Mr. G to emphasize that
eroding consumer confidence poses a greater risk to the economy
than rising inflation.

Then, on Friday, manufacturers will offer their assessment of
industry conditions in the National Association of Purchasing
Managers (NAPM) survey. The market consensus is for the NAPM
index to have risen to 42.1 in February, up from 41.2 in
January.  The NAPM prices paid index, a measure of the price
manufacturers pay for raw goods, is expected to have fallen to 63
in February, off from 65.7 in January.  Also on Friday, the
University of Michigan Confidence Index, a measure of consumer
sentiment, is forecasted to have risen slightly to 88.5 in its
final February revision.

As for earnings news this week, look for the retail sector to
grab most of the attention.  The Gap (NYSE:GAP), the limited
(NYSE:LTD), Dollar General (NYSE:DG), the Men's Wearhouse
(NYSE:ME) and Tiffany (NYSE:TIF) are all slated to reported.
Don't expect this quintet to have move influence on trading.

And speaking of trading, I think market sentiment this week will
hang on a fed funds interest rate cut.  Mr. Angell stuck his neck
out on Friday and I think many traders will be watching to see if
it gets chopped or not.  The fed funds futures market is fully
pricing a 50-basis point cut by the end of March.  Many traders
will be watching to see if half or all of it is dished out this

Should the market not get its interest cut, though, I doubt that
traders will rush to the exits.  Twice last week the COMPX was
able to reverse course after falling below 2,220, which is a good
sign technically.  What's more, according to the Internet Stock
Report, the previous four times the COMPX hit a new two-year low,
it was trading 1 percent higher three weeks later and 30 percent
higher a year later.

But keep in mind, for the tech-heavy COMPX to undergo a sustained
rally, consumer confidence will have to improve.  Let's face it,
the COMPX is a more speculative index than either the SPX and
INDU and people speculate more when they have more confidence,
which they are obviously lacking.  It's no surprise that the
Michigan consumer sentiment index has fallen lock-step with the

As for the broader market, I wouldn't be surprised if it
stabilizes this week.  Techs are now a much smaller percentage of
the market than they were ago.  In fact, the tech weighing in the
SPX has shrunk from 33 percent to 20 percent over the past year.
Besides, I think the worst is over for the techs, anyway (my
obligatory statement of the obvious).

In a nutshell, I think if we haven't hit bottom, we are darn
close.  Earnings warnings no longer devastate stock prices like
they once did, which means traders and investors are fully
discounting the worse, and when people discount the worse that
usually means everyone who is going to sell has already sold.  In
other words, selling pressure should abate considerably.

Nevertheless, until we get a clear sign the market is set to
reverse course (a sustain rally in techs that lasts more than a
week would be nice), we are going to stick with our formula of
defensive split run, split candidate and momentum issues and
tight stop-losses.

S.P. Brown

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Definition of the Day

Selling Short

This is the act of borrowing a security from a broker with the
agreement that the stock is to be returned. This is usually done
if the investor believes that the price of the stock is going

For the complete definition, please go to:

Friday's Split Announcements


Mondays Expirations by Payable Date

Mid-State Bancshares (MDST) splits 2:1

Event Calendar

For the week of February 26, 2001

Existing Home Sales     Jan  Forecast:  5.00M   Previous:   4.87M

Durable Orders          Jan  Forecast: -2.50%   Previous:   2.10%
Consumer Confidence     Feb  Forecast:   111    Previous:  114.4
New Home Sales          Jan  Forecast:  923K    Previous:    975K

GDP-Prel.                Q4  Forecast:  1.10%   Previous:   1.40%
Chain Deflator-Prel.     Q4  Forecast:  2.10%   Previous:   2.10%
Chicago PMI             Feb  Forecast: 41.30%   Previous:  40.20%
Agricultural Prices     Feb  Forecast:    NA    Previous:   -2.0%
Oil & Gas Inventory  23-Feb  Forecast:    NA    Previous: 277.1MB

Auto Sales              Feb  Forecast:   6.5M   Previous:    6.7M
Truck Sales             Feb  Forecast:   7.0M   Previous:    7.5M
Initial Claims       24-Feb  Forecast:   350K   Previous:    348K
Personal Income         Jan  Forecast:  0.50%   Previous:   0.40%
PCE                     Jan  Forecast:  0.60%   Previous:   0.30%
Construction Spending   Jan  Forecast:  0.50%   Previous:   0.60%
NAPM Index              Feb  Forecast: 42.00%   Previous:  41.20%
Mich Sentiment- Final   Feb  Forecast:  87.8    Previous:   87.8

ECRI Wkly Leading Indx  Feb  Forecast:    NA    Previous:   -2.8%

Week of March 5th

Mar 05  NAPM Services
Mar 06  Productivity-Rev.
Mar 06  Factory Orders
Mar 07  Consumer Credit
Mar 08  Initial Claims
Mar 09  Nonfarm Payrolls
Mar 09  Unemployment Rate
Mar 09  Hourly Earnings
Mar 09  Average Workweek
Mar 09  Wholesale Inventories

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Upcoming Splits

Symbol  Company Name                Splits  Payable    Executable

MDST - Mid-State Bancshares           2:1  02/26/2001  02/27/2001
SEIC - SEI Investments                2:1  02/28/2001  03/01/2001
WWY  - Wm. Wrigley Jr                 2:1  02/28/2001  03/01/2001
AGC  - American General               2:1  03/01/2001  03/02/2001
JKHY  Jack Henry & Assoc.            2:1  03/02/2001  03/05/2001
CYTC - Cytyc Corp.                    3:1  03/02/2001  03/05/2001
FRNT - Frontier Airlines              3:2  03/05/2001  03/06/2001
CPS  - ChoicePoint, Inc.              3:2  03/07/2001  03/08/2001
BOBJ - Business Objects               3:2  03/09/2001  03/12/2001
BMO  - Bank of Montreal               2:1  03/14/2001  03/15/2001
AFL  - AFLAC, Inc.                    2:1  03/16/2001  03/19/2001
EASI - Engineered Support Systems     5:4  03/16/2001  03/19/2001
KREM - Krispy Kreme Doughnuts         2:1  03/19/2001  03/20/2001
LTR  - Loews Corp.                    2:1  03/20/2001  03/21/2001
GENI - GenesisIntermedia              3:1  03/21/2001  03/22/2001
FRC  - First Republic Bank            3:2  03/22/2001  03/23/2001
RSAS - RSA Security Inc.              3:2  03/23/2001  03/26/2001

Successful Announcement Predictions For The Past Week

Symbol         Company              Date Announced

LTR            Loews Corporation       02/20
DGX            Quest Diagnostics       02/22


CEC - CEC Entertainment, Inc.  $40.50 (+1.85)
CEC, better known as Chuck E. Cheese has bubbled up to historic
split-levels of $40.  The stock last announced a 3:2 split on
6/24/1999 at $40.38.  With 34 million shares outstanding and 100
million shares authorized, CEC has plenty of room for another 3:2
split.  We will watch for an announcement out of CEC's next
earnings release on 5/22/01.

Chart = 


CORS - Corus Bankshares, Inc.  $48.88 (+0.75)
Corus has been bumping up against the $50 level for the past two
months.  The stock last split 2:1 in 1995 around the $50 level.
The company has 50 million shares authorized and only 14 million
outstanding.  We will keep an eye on the company's next earnings
release scheduled for 4/30/01 as the next likely time for a 2:1
split announcement.

Chart = 


VAR - Varian Medical Systems  $68.81 (+1.11)
Varian has not split its shares since 1994.  Since then the stock
has lost 80% of its value, only to gain it back and then some.  We
feel VAR is back in split range and could announce a 2:1 split at
its next earnings release date of 4/25/01.

Chart = 

Expected/Likely Announcements for the Coming Week

                                       Date Expected
Symbol         Company                 To Announce

PSS            Payless Shoesource, Inc.    02/26


PSS - Payless Shoesource, Inc.  $74.30  (+0.46)

Although Payless has never split before, we are holding out for a
2:1 split announcement to coincide with the company's earnings
release scheduled for 2/26.  The company has 240 million shares
authorized but only 22 million outstanding.  We think it is about
time that shareholders are able to pay less for Payless.

Chart = 

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