Email Version, Section 1, Sunday, 03/05/2000
The SplitTrader.com Newsletter Sunday 03/05/2000 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
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Starting today we will be separating the Sunday SplitTrader.com
Update into 2 seperate Updates. One will be your regular Update,
and the second will focus on Split Candidates, including our
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In This Newsletter:
Market Commentary - Score one for you and us!
Friday's Split Announcements - MRVC, EXDS and USIX
Sector Watch - Breakdown by sector of market performance.
Event Calendar - Next week's economic reports
Editorial - Nokia and Ericsson Share Japan Telecom Deal
Split Play-of-the-Day - AMAT
Split Plays - New - Updates - Drops
Score one for you and us!
Last week, I talked about a couple things regarding the changing
investment scene. In addition, I closed by telling readers that
the analysts at ST felt there was a strong likelihood of a "major
bounce" in the blue chips and the Dow. News this week and the
overall action proved us correct.
Regarding the changing investment scene, many of you probably
know that I have repeatedly come back to this theme for the last
5 months or so. Why? Because it is important for today's
investor to understand the new dynamics that are taking place and
shaping up in today's investment scene. Failure to recognize and
adapt to these changes could be disastrous for an individual
investor. Because of this, I feel it its our duty to do
everything we can to keep you informed. Having said that, I also
recognize that this past week was probably a big one for many of
you in the markets, so you probably don't want a "sermon on the
mount" about the changing scene this week, especially after last
Let me just say this. Last week, among other questions, I asked
who was right regarding the NYSE and the NASDAQ. From there, I
went on to compare the two. The week before, I spoke about the
two roads and the one less traveled. Both commentaries were
meant to address and highlight the growing divide between the two
major exchanges in our markets. The old and the new. How things
were done and how they are done now. Blue bloods versus young
bloods. Industry chiefs of old and the titans of the new
economy. The bottom line, simply put, is that the NYSE continues
to represent the old to a large and growing number of investors.
Meanwhile, the Nasdaq more and more represents the land of
opportunity. The place where the "in-crowd" resides and invests.
As for who is right, the answer may have been offered this week.
Officials of both the NYSE and the NASDAQ met for the first time
to discuss merging. As more details come available, we will
provide them to you in the near future. For now, ask yourself
"who cried uncle"? It's possible that this is a deal in the best
interest of both exchanges, but you have to question if the guys
at the NYSE would have even let the NASDAQ boys in the front door
as recently as a year or two ago. It makes you wonder whether or
not someone is hearing footsteps fast approaching.
Whatever the case and whatever happens with the merger, no
investor should forget about or underestimate the power wielded
over at the NYSE and within the venerable Dow index. These
industry chiefs are still among the most heavily capitalized and
stable companies in the world.
Which brings me to the other point conveyed to you last week.
The Dow and blue chip stocks in general were getting too cheap to
ignore. I told you last Sunday that I thought the index would
sell off hard on Monday, but that might very well be it. At that
time, I told you that the Dow needed to hold 9750-9800 and that a
failure to do so would result in the likelihood of a midweek
visit to the 9500 level. The widely held belief among all of us
here at ST was that this would not be the case. This belief was
based on looking at the charts and understanding the nature of
traders and their ability to sniff out a bargain. As I told you
on Sunday, we were probably once again looking at a game of
musical chairs in the market; only this time around traders would
be looking to jump in instead of out of the market when the music
stopped. Both right and wrong. The index didn't sell off hard
on Monday, instead trading up from the get go and establishing
the first 5-day up streak for the Dow in quite some time. This
was due to traders stepping in to buy up bargains, which you were
told to expect. The misjudgment regarding the open on Monday was
in assuming that the music started with the sub-10,000 close on
Friday. In reality, the sub-10,000 close marked the stoppage of
the music, signaling traders to jump in first thing Monday
morning. In the end, the Dow and blue chip issues got the
serious bounce you were told to expect.
This just goes to prove another age-old adage in investing; you
can't be right all the time. When you are right, you have to
take advantage of it. When your not, recognize it, learn from it
and do something about it quickly. The analysts here at ST are
all seasoned traders who live by this. You as individual
investors should do so as well.
As for Friday's action in trading, BOOM! A blast best describes
the action as well as the pleasure that most investors enjoyed in
watching shares in almost any sector appreciate. The weak job
report (we will get back to that) started things off on the right
foot and broad-based momentum took over from there. Leading the
way were techs, both the bios and high techs once again.
Semiconductors had another stellar day. Almost anything tech
related was helped in general, as they had been all week, by the
spotlight on technology at the Robbie Stephens Tech 2000
Conference, despite the fact the Conference ended Thursday.
Additionally, strength could be found in issues related to health
care, chemicals, aluminum, transports, auto, retail, brokerage,
steel, telecom and financials.
In blue chip trading, the Dow managed to break one streak while
keeping another one going. By closing up, the index made it 5
straight sessions of positive closes. Additionally, a streak of
Friday loses was snapped. Prior to this week, the index had lost
over 200 points on 4 of the previous 5 Friday's. Fittingly, the
Dow posted a plus 200-point gain to cap the turnaround.
For the session, the Dow added 202.28 to close at 10,367. At
midday, the index actually traded well above the 10,400 level,
but profit taking in the second half of the day pushed the index
back below that mark. Despite that, the Dow still managed to
hold onto most of the gains, trading strong into the close.
Volume for the day was heavy, with 1.16 billion shares changing
hands. Up volume eclipsed selling volume by a 2 to 1 margin. As
would be expected on such a positive day, advancing issues
trounced declining issues 17 to 12. New highs and new lows were
close to even.
Of the 30 component companies in the Dow, 20 finished up for the
day. Among the blue chip standouts were IBM +4.81, HWP +4.69, GE
+4.19, DD +3.94, CPQ +1.19, Q +4, USW +3.13, AOL +1.13, DIS +2
and TYC +3.
Drug and oil related stocks were the only real sectors not
participating in Friday's rally. The notables suffering down
days included MRK -2, JNJ -1.44 and XOM -0.94.
Technically, the Dow is looking good at this point. The action
this week helped to break the index out of its recent strong
downtrend. Friday's trading and close would in fact seem to
point to the development of a new up-sloping trendline.
Additionally, the index managed to close above its 5 and 10-
dma's, actually trading up to its 20-dma. Although it remains
below the all-important 200-dma, the crossover above the shorter
term moving averages is indeed a bullish signal. The next test
to prove or disprove the current rally will come at 10,500. This
is more of a psychological test, as the real test will be
reestablishment above the 200-dma. To do so, the Dow will have
to trade back above the 10,800 level. As mentioned last week, it
was the failure of the index to maintain that level that started
the whole selloff to begin with. In terms of support, there is
some just below at 10,300, but the real support is lined up at
100-point increments going back to 10,000.
Over at the Nasdaq, the Compx continued its assault on 5000 and
added another page into the record books. The index set yet
another record and traded to close above 4900 for the first time
ever. For the day, the Compx added 160.28 to close at 4914.79.
The close was impressive as the index broke through 4900 in the
final hour and closed at the high for the day. Volume was once
again very heavy, with over 2.14 billion shares traded. Volume
to the upside came in at more than three times that of selling
volume. Advancers beat out decliners 13 to 8. There were an
astonishingly high number (443) of companies setting new 52-week
As you can tell from the breadth, the buying was broad-based
across most sectors. Among the standouts were MSFT +2.75, INTC
+3.50, ORCL +6.50, DISH +8.94, CHKP +9.25, ALTR +15.13, COMS
+1.25, CSCO +4.69 and DELL +1.31. The notable standout in the
loser column was Thursday's big IPO winner, PALM, which posted a
loss of -14.81.
As for the chart, the Compx and the Nasdaq in general are both
healthy. The record amount of money inflow from institutions and
401-k plans continues to fuel the buying. The high techs such
as B2B's, networking, security, backbone, optical,
telecom/wireless and semi's all seem poised to move higher,
joined by the big and mid-cap names in the biotech sector. As
has been mentioned previously, the index is trading in a
sustainable 45-degree channel, which it first formed late last
October. The only negative for now would appear to be the fact
that Friday's close places the composite right at the top of the
channel, indicating the possibility of some retracement over the
next day or two. On the flipside, the chart indicates that if
the Compx continues to trade within the channel, 5000 should be
eclipsed this week. To help put things into perspective, if that
same channel is maintained through mid-May, the Nasdaq will trade
up and through 6000, more than doubling since this past November.
The sector indices traded higher across the board. The Dow
Utilities index added +2.2, Transports were up +80.52, the
Internets (DOT) gained +56.99, semi's (SOX) were once again
strong, adding +75.38 and the S&P 500 managed a gain of over +27
points. Small and mid-caps continue to participate in this
broadening rally, with the Russell 2000 and the S&P 400 Midcap
adding 2.3 and 2.9 percent respectively.
In the credit market, the 30-yr Treasury bond managed to gain
$0.13, dropping the yield to 6.12%. The 10-yr note also managed
a positive close, adding 1/32 to yield 6.39%. The inversion of
the yields continues to persist, but traders are coming to the
realization that the debt pay down program by the government has
changed the dynamics within the market. As has been mentioned
here before, bond traders are more and more starting to refer to
the 10-yr note as the new bellwether for treasuries and rates.
The gains in bonds and equities were prompted by the release of
the February employment and wage numbers by the Labor Department.
The report showed a substantial drop in Nonfarm Payrolls. The
street had expected the number to drop from 384 thousand to 235
thousand. In fact, that number came in substantially lower at 43
thousand. The unemployment rate was expected to remain unchanged
at 4%, but actually came in indicating a gain in unemployment of
0.1% to 4.1%. Hourly earnings, a gauge used by the Feds to
measure inflation due to the tightening labor pool, remained
unchanged and inline with expectations at 0.3%. Factory orders
for January also pointed to indications that the Fed hikes had
started to take effect. That number came in at -1.1% versus an
expectation of -0.6%.
All in all, the numbers were positive and the markets responded
in kind. Despite this, few economists or traders believe the
numbers will prompt the Fed to hold off on another 25-basis point
hike at the March 21st FOMC meeting. As for the coming week, the
economic calendar is light and not likely to be much of a factor
in trading. Revised 4th quarter productivity numbers, Consumer
Credit for January, the Beige Book Report, weekly initial claims
and Wholesale Inventory numbers for January are set to be
released. The one event that could potentially disrupt the
markets will come on Monday when Greenspan gives a speech on the
"New Economy" in Boston. Traders will watch to see if he drops a
bombshell regarding the market or a likely move at the upcoming
In the news on Friday, an analyst at Bank of American stated
"every company in every industry globally will create or
participate in e-marketplaces within one year". This prompted
renewed enthusiasm among buyers for the B2B's. Among the stocks
benefiting were CMRC +12.13, PPRO +1.50, BVSN +11.75 and ARBA
Speaking of ARBA, they were among several companies that enjoyed
a positive day in part due the announcements of stock splits.
Ariba actually announced their 2:1 split on Thursday, after the
market. Exodus, US Internetworking and MRV Communications
announced splits as well. Shares of EXDS (2:1) added +10.56,
USIX (3:2) tacked on 6.44 and MRVC (2:1) hit the jackpot, gaining
A story from Thursday that remained in the spotlight Friday was
the one involving the possible merger of Qwest Communications (Q
+4) and Deutsche Telekom (DT +1.56). This deal might possibly
affect the planned US West (USW +3.13) and Qwest merger.
Stirring the pot up Friday was the news that DT might instead be
interested in Global Crossing (GBLX +2.06). Amazingly, despite
the intrigue, all the parties ended the day in positive
On the earnings front, this week will be light. At this point,
all but 14 S&P 500 companies have reported. The notables set to
release numbers this week, include; EchoStar, Dillards, Kmart
Corp, Voice Stream, Comverse Technologies, Toys R Us, 24/7 Media,
Fruit of the Loom, Genzyme, H J Heinz Co., National
Semiconductor, Lands' End and CMGI Inc.
The week ahead is packed on the Conference front, with major
conferences scheduled in the areas of retail, growth,
institutional investing, semiconductors, optical fiber and health
care. As was the case last week with the Robbie Stephens Tech
Conference, many of this week's conferences are sure to make news
and highlight industry leaders. This should in turn influence
trading in the shares of many of the companies presenting at the
various conferences. We would suggest that you check the events
calendar located on the SplitTrader.com website for further
details on the conferences and their scheduled dates.
For the week ahead, continued momentum buying in many of the tech
sectors should be expected. This may very well translate to
fast-paced sector rotation among the bios and the high techs once
again. Then again, if Friday's rally holds up, the momentum will
remain broad-based, with buying occurring among small to large
caps, including participation of the blue chips and cyclicals.
The thing to keep in mind is the fact that the Dow and the Nasdaq
have just completed rather remarkable weeks and are probably due
for some retracement. The Dow is likely to trade up to challenge
the 10,500 level this week. Don't be surprised to see it
struggle to get through, at least on the first attempt. The same
holds true for the Nasdaq in its quest for 5000. Both indices
will have had to gone far to reach those mile-markers.
Translation-buyers may be exhausted by the time they get there.
In the case of the Nasdaq, as I stated earlier, it is at the top
of its channel, so a little retracement is in order. For the
entire market, this past week took the volatility index (VIX)
from an oversold reading to an overbought reading. This doesn't
necessarily translate to selling anytime soon, but traders need
to be aware that the condition exists. All in all, I look for a
positive to somewhat sideways week ahead. Whatever you're
trading in, be aware of both the major indices and where they are
trading at. Oftentimes, the biggest mistake made by a trader is
not recognizing how the bigger picture affects his or her trade.
From a reader:
I just have to share it with you. When it's real, it just bubbles
out of you. That great feeling all over, just like in the movies
when they roll in the money on the bed.
I'm 45 years old; I've worked with the same company since 1978.
I've been in their 401k plan, with some Company stock, and all
the various plans the 401k Investment Group offers.
Yes I was making money, but it was slow, and the payback vs. what
I was putting in just didn't cut the mustard. The Company stock
investments, over the years, were good. But the 401K Investment
Plans were just to slow, to hit the big numbers. Nobody was going
to retire, anytime soon, and have his or her bills paid off.
Then as life went on, I got married, and still am happily
married. We have 3 kids; one is 16 year olds and driving. One
will be driving next year, and one is turning 11 years old. Like
so many other people, I have a 2nd mortgage, and lots of credit
I was getting depressed, feeling very down a lot of the time
wondering how will I ever pay all these bills. As of last summer,
My 401k was ~$130k, then I finally ventured out of the 401K
funds, started investing in some Tech stocks. You know how the
rest went, within a few months I had $140k, then $160k, then it
started to swing +/-, but managed to stay near $160k. I was still
way ahead, based on my past investment achievements. But I was
loosing some of the profits, I wasn't very efficient at managing
the account on my own, because I didn't have any guidance, I was
playing on my own. I struggled through the summer, and then
Christmas 1999 came and went. I wasn't making the progress I
Then, one day this year, in the first part of Jan 2000, I saw a
SplitTrader news alert message on one of the stock screen
displays. I clicked on it, and somehow the light has been shining
down on me ever since. You have turned my life around, I feel
great, everyday, and I can't go to sleep at night, from the
excitement of the day, but yet the next day I still wake up
early, ready to rise and shine, and go make some money.
I had to save the best part for the ending; I'm right on the
verge of crossing into the $300k range on my 401K plan. Can you
feel, how I feel, after the years it took me to get to $160k, and
now in less than 6 months I'm right at ~$300k. I have never ever
been so happy, and lucky in my whole life. Please keep on keeping
on with the tips. You throw us a good pitch, and we'll hit the
In the short time I've been with you, the one thing I've learned
the hard way is follow your directions, and suggestions. There
were times I didn't set any stops, and times I set the stop loss
to high. That cost me some, but it also gets your attention.
Follow the rules, and you'll make money. If I had followed the
rules exactly, as you indicated, I'm sure I would already be over
the $300k mark. That's the best advice I can offer to any new
players. Leave the planning up to SplitTrader, and just follow
the leader. Like the Web Page says, "Your World Leader For Split
Trading On The Internet"
I just have to say, Split Trader, you're the greatest, and thank
you, for turning my life around. Please keep guiding us toward
that road to success But I do read all your news, and count the
minutes till the next update.
Thank you for being there. You're the best.
I wanted to personally thank you on behalf of the entire
SplitTrader.com staff. It is because of people like you that we
offer this service. The individual investor has always operated
at a disadvantage to the big players and we find this
fundamentally unfair. In today's market, it is more critical
than ever to have as many research tools and information as is
possible to make informed decisions. We try to provide these
things and more on the site and within the newsletters.
Everything we offer is geared towards the individual and is meant
to level the playing field. Believe me when I say that it
gratifies and motivates us every time a subscriber takes the time
to share their success story with us.
Good luck and continued success!
Friday's Split Announcements
Friday, March 3, 2000, Before the Bell
Fiber Optics Company Announces Split
MRV Communications Inc. (NASDAQ: MRVC) today announced a 2 for 1
split of the Company's common shares. The Board of Directors
announced the split, subject to shareholder approval. A special
shareholders meeting will be held in the second quarter of this
year to authorize an increase in available shares from 80 million
to 160 million shares and to approve the split. The Company will
have approximately 57 million shares outstanding after the split.
No payable date has been announced.
For the complete announcement, please go to:
Friday, March 03, 2000, Before the Bell
Internet Hosting Company Announces 2-for-1 Stock Split
Exodus Communications (NasdaqNM: EXDS) announced before the
morning bell that its Board of Directors has approved a two-for-
one stock split as a stock dividend. On June 6th the company will
hold its annual shareholder meeting in order to get approval to
increase the number of authorized shares. The company will use
April 20th as the record date and become payable to shareholders on
June 20th. 170.5 million shares are currently outstanding, with a
float of 146.6 million.
For the complete announcement, please go to:
Friday, March 03, 2000, During the Market
USinternetworking Inc. Announces Another 3:2 Stock Split
The mid-day announcement of a 3:2 Stock Split is the 2nd in three
months for USinternetworking Inc. (Nasdaq: USIX). The payable
date has been set for March 28th. The company currently has 450
million shares authorized and 64 million issued.
For the complete announcement, please go to:
As of Market Close - Friday, March 3, 2000
Broad Market Bearish/Bullish Last Posture/Since Alert
DOW Industrials 10,700 11,250 10,367 BEARISH 2.17
SPX S&P 500 1,400 1,450 1,409 Neutral 3.03 *
OEX S&P 100 740 780 766 Neutral 3.02
RUT Russell 2000 500 520 598 BULLISH 2.24
NDX NASD 100 3,800 4,000 4,443 BULLISH 2.24
MSH High Tech 1,850 2,000 2,148 BULLISH 2.24
XCI Hardware 1,300 1,460 1,588 BULLISH 2.24
CWX Software 1,200 1,470 1,578 BULLISH 2.24
SOX Semiconductor 800 900 1,211 BULLISH 2.24
NWX Networking 940 1,000 1,158 BULLISH 2.24
INX Internet 700 800 784 Neutral 1.06
BIX Banking 500 550 485 BEARISH 11.30
XBD Brokerage 400 450 488 BULLISH 2.31
IUX Insurance 500 550 470 BEARISH 11.30
RLX Retail 950 1,000 841 BEARISH 1.28
DRG Drug 340 380 315 BEARISH 2.18
HCX Healthcare 700 750 660 BEARISH 2.18
XAL Airline 120 140 121 Neutral 3.03 *
OIX Oil & Gas 280 315 256 BEARISH 1.27
Sector Watch Alert:
The employment figures sparked a huge rally on Wall Street, as
fears of inflation have subsided, at least for one day anyway.
Most industries participated in the big day, however, the Software
sector led the way with a +7.29% gain! Other notables include
Semiconductors (+6.64%), Internet (+6.46%), and Airlines (+4.76%).
With this most recent action, we have upped Airlines and the S&P
500 to Neutral from Bearish.
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.
For the week of March 6th, 2000
Productivity-Rev. Q4 Forecast: 6.4% Previous: 5.0%
Consumer Credit Jan Forecast: 7.0B Previous: 11.2B
Fed Beige Book
Initial Claims 03/04 Forecast: 280K Previous: 275K
Wholesale Inventories Jan Forecast: 0.4% Previous: 0.4%
Week of 3/13
03/14 Retail Sales
03/14 Retail Sales ex-auto
03/15 Business Inventories
03/15 Export Prices ex-ag.
03/15 Import Prices ex-oil
03/15 Industrial Production
03/15 Capacity Utilization
03/15 Current Account
03/16 Core PPI
03/16 Housing Starts
03/16 Building Permits
03/16 Initial Claims
03/16 Philadelphia Fed
03/17 Core CPI
03/17 Michigan Sentiment
Nokia and Ericsson Share Japan Telecom Deal
By Cindy Christ
Shares in the world's No. 1 and No. 3 mobile phone companies
were trading higher Friday after both landed contracts to help
build Japan Telecom's next-generation communications network
that will allow users to access the Internet from wireless
Partners Vodafone/AirTouch (VOD) and British
Telecommunications (BTY) will work with Japan Telecom to
launch the advanced network, known as 3G for third generation,
which will start operating in phases in 2000 and 2001.
For the complete article go to:
The PLAY LEGEND:
SplitTrader.com Split Run Play Recommendations.
Play-of-the-Day is our number one split run play recommendation
for the following trading day.
Updates are just that - updates on continuing plays
New plays are brand new for the newsletter.
Drops are closing 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
>>at the SplitTrader.com website, we have comprehensive profiles
for each stock that we are playing or have played in the past, as
well as hundreds of others. Please take the time to visit the site
to view the profile of the stock(s) you wish to learn more about.
Split Run Play-of-the-Day
AMAT - Applied Materials $190.75 (+18.44)
Please see details in the Split Run Play Update Section Below.
Picked on Feb 24th @ $183.50
Change since picked +7.25
Chart = http://www.splittrader.com/charts/charts.asp?symbol=AMAT
NEW SPLIT RUN PLAYS 03/05/00
ADI - Analog Devices $167.00 (+10.13)
Analog Devices makes high-performance analog, mixed-signal and
digital signal processing integrated circuits. Their products are
typically used in signal processing equipment and systems for use
in communications, computer, industrial, military/aerospace and
high-performance consumer electronics applications. The Company's
largest product group is general-purpose Standard Linear ICs. This
is a reliable company in a hot sector. On 2/16, ADI set a 2:1
stock split with a payable date of 3/15. Since the announcement,
the stock has soared from $127.50 to a high of $167.75 on Friday.
The new high comes after 5 sessions of consolidation and we feel
that the stock is about to make another run. Sector momentum is
strong and the market conditions are positive for this type of
play. Support is steady at $160 and again at the 5-dma, now at
$158, with stronger support at the 10-dma ($153). Resistance is
$170 and then $175. Open new positions on a bounce off of support
or a breakout above $170 on heavy volume. Only play in a rising
market. Plan to exit no later than 3/14.
Picked on Mar 5th @ $167.00
Change since picked +0.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=ADI
CSCO - Cisco Systems $137.44 (+3.53)
Simply put, Cisco has created an infrastructure that enables the
Internet to function. The dependence the Internet has on Cisco's
internetworking products is continually being recognized by
investors and is reflected in the performance of its stock. CSCO
is one of just a few Internet-centered companies that have been
able to grow business with positive earnings. The most recent
projections show CSCO growing its revenues by 50% in 2000,
unbelievably a 16% increase over 1999 revenues. In addition to
the Company's dominance in the marketplace, their stock price has
had superior post split performance, gaining an average of 90%
between each of the last 3 split announcements. On February 8th,
the Company announced a 2:1 stock split, which will be paid on
3/22. The short trigger for the split promises to create
immediate excitement and should draw in momentum investors over
the coming days. If this does occur, shares of CSCO are sure to
offer investors yet another profitable split run. As for our play
now, Friday saw the stock break out a weeklong consolidation with
a gap and run at the open. The price ran to its 52 week high of
$138.94 before finding resistance and closing slightly lower at
$137.44. A break through this resistance level of $139 sets the
stage for the next run. The first level of support may be found
at Thursday's closing price of $132.75, which would effectively
close Friday's gap. The $132.75 level is also supported by both
the 5-dma ($132.95) and the 10-dma ($132.31). Just below this
area, the $130 level provided support throughout this past week,
bolstered by the 20-dma. Look for a price breakout and potential
new plays if the stock closes above its resistance level of $139.
Otherwise, new positions can be initiated on a bounce off support
accompanied by good volume. An exit strategy should be in place
before the payable date of March 22nd.
Picked on Mar 5th @ $137.44
Change since picked 0.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=CSCO
NOK - Nokia Corp. $221 (+16.12)
Nokia's phones are ringing and investors are answering the call.
NOK is benefiting from the steady growth and popularity of
cellular phones and the strong demand that the Internet is
creating for wireless data transmissions. NOK, which stands at
the top of a rapidly expanding market, supplies infrastructure
equipment and systems for cellular and fixed networks. Just how
popular are its products? Growth in income has risen an average
of 60% over the last 3 years. Earnings are estimated to rise by
30% this year and revenues by at least 40%. Recently, the Company
announced a 4:1 stock split. The details of the split will be
cleared up at their Annual General Meeting to be held on March
22nd in Helsinki, Finland. The payable date is expected to occur
within 1 to 3 three weeks thereafter. This offers us the
opportunity to take positions before the momentum investors run
the price up in anticipation of the split run. In regards to the
chart, the stock broke into new territory Friday, closing at a 52
week high of $221. Not only did the stock reach an all time on
Friday, it also gapped above the upper trendline of an ascending
triangle. The stock may now potentially find new support on top
of this trendline. Look for the next level of resistance to be
found at the $230 mark. As for support, the initial level is
found at the $206 mark, which is also reinforced by a 5-dma of
$207. The next area of support is found at $200, also the
location of the 20-dma. Potential plays may present themselves
along these support areas if the stock retraces to these levels
and then bounces upward with increasing volume. However, given the
recent breakout of the stock, look for upside potential to remain
strong. Look to exit the stock in front of the payable date, as
is our normal policy.
Picked on Mar 5th @ $221
Change since picked 0.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=NOK
NTAP - Network Appliance $199.94 (+7.00)
Network Appliance is on track to beat 1999's stellar performance.
Shares of the network data storage company gained 277% in 1999.
In only 2 months, NTAP has risen another 135% for the year to
date. The company also makes caching devices and their NetCache
product has proven very popular. Other stocks in this sector,
i.e. Cacheflow (CFLO), have been garnering attention from analysts
and traders as well. NTAP has a split coming up, payable on 3/22.
The stock flirted with the $200 level on 2/25, but profit taking
temporarily beat the price down. Now it looks like it has
consolidated and is ready to trade above $200. We like the
current entry point, as the stock is trading near trend line
support, with channel line resistance near $225. That's a lot of
room to run. Enter this play near support or on moves over nearby
resistance areas. Support is $195, then $190. Resistance is
$200, $202, then $208. We will terminate this play no later than
3/21, the day before the payable date.
Picked on March 5th @ $199.94
Change since picked 0.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=NTAP
PUMA - Puma Technology $172.00 (+9.44)
After a nice earnings and split candidate run in February, we are
ready to "pounce" (no apologies offered) on PUMA yet again. The
split announcement came before the earnings so they offered a
little bonus there. With that kind of wonderful treatment how can
we not want to give the stock another chance? The split is 2:1
and is payable March 22nd. The Palm Pilot IPO got all of the
headlines last week but that company is just one cog in the wheel
of wireless computing and communications. PUMA is a leader in
providing wireless software solutions and more and more it looks
like wireless is here to stay and influence our little
technological lives. If you like volatility you're going to love
PUMA! So far this year, PUMA has nearly doubled, been cut it half
(without the benefit of a split) and more than doubled again. The
drop from $140 resulted in a fairly long rounded base capped off
by a double top breakout. The follow through was substantial, up
all the way to $180. With a split fast approaching and a huge
interest in wireless stocks, we believe that a test of $200 could
come very soon. If PUMA can break above Friday's high of $174 it
would break a pattern of lower tops and could be a very good buy
at $175.25 for aggressive traders. If PUMA has an inside day
(stays within Friday's range), look to go long if it takes out
Monday's high on Tuesday. There is some support at $155 but more
substantial support exists at the old double top of $140.
Picked on March 5th @ $172.00
Change since picked 0.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=PUMA
SPLIT RUN PLAY UPDATES 03/05/00
ADIC - Advanced Digital Information Corp. $96.94 (+12.88)
Companies are terrified that pimply-faced, disenfranchised
geniuses can hack into their systems and wreak havoc. One defense
is to back up all of your crucial data in storage libraries, just
the kind of thing ADIC would be only too happy to sell, manage and
maintain. The last quarter was great for the company and this
quarter is also appearing to shape up pretty well. ADIC also has
an investment that would make any fund manager ask for a raise.
ADIC owns just over 2.6 million shares of Crossroads Systems Inc.
(NASDAQ:CRDS). Since its IPO back in October, the stock has risen
well over 100 points, thus creating some huge unrealized gains for
ADIC. Although ADIC has appreciated quite a bit recently, it
still appears that the Company has not been properly respected for
its stellar investment. Add all of that to a 2:1 split payable on
March 13th and you have a stock that could be poised for more
gains. In the news, ADIC announced that it is developing storage
area networks for the Linux operating systems. We had a bit of a
scare on Thursday as ADIC looked like it wanted to reverse its
huge move after failing to stay above $100. Fortunately, a rising
tide lifts all boats (as long as it is a high tech boat) and ADIC
climbed right back into position for a split run to possibly over
$100, which is, of course, resistance. There is solid support at
$87 and do not be surprised if the stock builds a flag around the
$95 level before attempting a split run. We will exit this play
by the close of trading on Friday, 3/10, which is the day before
the payable date.
Picked on Feb 29th @ $90.63
Change since picked +6.31
Chart = http://www.splittrader.com/charts/charts.asp?symbol=ADIC
AMAT - Applied Materials $190.75 (+18.44)
Applied Materials has been one of the strongest stocks, in one of
the strongest groups, semiconductors, throughout this rally.
Semiconductor demand has exploded and AMAT, the largest provider
of tools and equipment for the production of chips, is poised for
solid growth until this boom cycle for production subsides. In
the meantime, investors are only too happy to keep placing their
bets on winners like AMAT. The Company has rewarded that faith in
its shares by announcing another 2:1 on February 16th, its fifth
split in the past eight years. The split is payable March 15th.
The split came on the heels of another very good earnings report.
Bookings are solid and indications are that the company is
experiencing another good quarter. Because AMAT is a leader in
the NASDAQ, it was not surprising that the stock managed to climb
to a new high on the incredible strength in the overall market.
The current pattern is remarkably similar to the chart pattern
exhibited by the company in late January when the stock quickly
recovered from a sharp pullback to resume its up-trend. The rally
that ensued lasted for six consecutive days and was good for a
rise of 30 points. If recent history repeats, then we could have
a position in a stock ready to make a nice bullish advance.
Considering that the stock managed to close above the
psychologically important $190 level and that the split is only 10
days away, look for AMAT to continue to lead the market higher.
Monday, the Morgan Stanley Dean Witter Semiconductor conference
kicks-off and will last for three days. This could provide
momentum for the stock to move higher toward $200 to rejoin the
established trend line. If the stock should pull back to catch
its breath, look for support at $190, then $180 as possible entry
points. Our target date for this play is 3/14, the day before the
Picked on Feb 24th @ $183.50
Change since picked +7.25
Chart = http://www.splittrader.com/charts/charts.asp?symbol=AMAT
BBSW - Broadbase Software $156.00 (+31.13)
The story is; Internet software companies are very hot and we are
sticking with it! BBSW designs software that helps businesses to
better integrate and analyze the reams of information they
accumulate about their customers. Specifically, BBSW's software
enables companies to improve their customer acquisition and
customer retention. Back on January 13th, BBSW celebrated their
stock's recent moves by announcing a 2:1 split. Even though the
split was announced six weeks ago they still have not set a
payable date. We received the break out we were looking for last
week, as BBSW moved out of a consolidation area in the $120's and
finally took out the double top in the low $140's. The spike did
establish a nice new high before pulling back. BBSW was
relatively weak during the huge NASDAQ rally on Friday, trading up
only a couple of points. It appears that BBSW is forming another
flag pattern just like the one it just broke out of. Resistance
is $160 and support is $150. A move above the resistance could
take the stock to a test of the old highs at $172. If support
fails, the stock could pull back to the trend line near $140. Set
stops based upon your entry price, placed slightly under support
Picked on Feb 17th @ $132.50
Change since picked +23.50
Chart = http://www.splittrader.com/charts/charts.asp?symbol=BBSW
BVSN - BroadVision Inc. $260.63 (+20.13)
BroadVision rose to an all-time high Friday, after a 'buy' rating
was received from investment bank Donaldson, Lufkin and Jenrette.
That's reason to be excited, but we are concerned that the $11.75
upward move was made on very low volume. We would be surprised to
see follow through on such a low volume day. Only a very short
window remains in this split play, as the payable date is 3/13.
We need to see some buying soon to confirm that traders are
excited about the split play. New plays can be initiated near
support, which is very light at $260, better at $250. Resistance
is the intra-day high at $262. This late in the game, we are
setting a stop at $243, which is just under support at $245. We
will exit the play no later the close of trading on Friday, 3/10.
Picked on February 29th @ $252.56
Change since picked +8.06
Chart = http://www.splittrader.com/charts/charts.asp?symbol=BVSN
IMNX - Immunex Corporation $244.44 (+42.81)
Immunex is a veteran among these explosive biotechs. IMNX already
has several viable products on the market and is poised for more
blockbusters due to its participation in the genome revolution.
In just one year, shareholders of this stock have already enjoyed
two 2:1 splits. The Company has seen fit to split its shares
again. This time 3:1! With a payable date fast approaching (on
or around March 20th), IMNX seems ready to make another split run.
Considering how strong the sector and the overall market are, a
very nice run is entirely possible. You would be hard pressed to
find a better-looking chart than the one that IMNX possesses. The
recent strength is due, in addition to the split, to some positive
news. First, IMNX received an "approvable letter" for its MS
drug, Novantrone last week. Second, an analyst at Credit Suisse
First Boston raised their target price to $300. Notice the "key"
number. We suspect that they too, sense a split run coming.
Third, it was reported Friday that studies on their new Asthma
drug Novance are yielding very positive results. Look for more
interest in the shares of IMNX and the biotechs in general as
several major conferences are on the horizon, giving the
representatives of the company the opportunity to tell their
bullish story to institutional investors. On Wednesday, we saw a
textbook breakout from a flag pattern. The pattern is very
bullish and the stock rallied nicely. Look for the stock to find
resistance at $250 if it spikes up again. Recently, moves like
the one we saw on Wednesday result in a few days of consolidating.
A trading range between $220 and $240 would likely develop if we
have some selling on Monday. Therefore, try and initiate new
positions on pullbacks to support levels. Aggressive traders can
certainly try and go after any spike ups trying to test $250.
Picked on Feb 29th @ $197.44
Change since picked +47.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=IMNX
INSP - Infospace.com $259.81 (+34.50)
We finally have a payable date for the stock split - it's April
6th. We've been waiting for word from the company ever since the
January 31st split announcement. The stock has been trading on
excellent momentum anyway, but this gives us a target and
additional momentum from traders looking to participate in the
split run. Friday, the stock traded lower, partly on profit
taking from the huge run of the previous two days and partly
because traders were disappointed that the payable date is a month
away. Technically though, no damage was done to chart support and
we are still trading above the old channel line. The stock did
get a nice bounce up from support at $250 during intra-day
trading, which provided good opportunities for new entry. For new
plays, enter near support levels or on moves above resistance.
Support is light at $255, better at $250. Resistance is $261,
Picked on Feb 10th @ $191.50
Change since picked +68.31
Chart = http://www.splittrader.com/charts/charts.asp?symbol=INSP
JDSU - JDS Uniphase $280.00 (+23.19)
This is shaping up to be a very active week for JDSU. On the
schedule is a big optical networking show and the Friday, 3/10
payable date. First though, let's review the Friday, 3/3 action.
As we said, $285 was resistance - it traded up to that point then
retraced to the $280 area, which it held for nearly the entire
day. That's highly unusual - a volatile stock like JDSU rarely
trades in such a tight range. As soon as any move up was made, it
was pulled down. Then, just after the close, some very large
trades went across the ticker - in other words, the stock was
being accumulated for some large institutional trader(s). We are
anticipating some great upside potential here. The annual optical
networking industry trade-show starts Monday in Baltimore. JDSU
has already said they plan to introduce 30 new products aimed at
the telecommunications and cable TV sectors. New plays can be
initiated near support or on moves over resistance. Support is
light at $280 and $277, better at $270. Resistance is $285. We
will exit this play by the close of trading on Thursday, 3/9 to
avoid the possibility of profit taking on the 3/10 payable date.
We may playing this again soon, as JDSU may very well announce
another split as soon as this one expires!
Picked on Feb 24th @ $258.00
Change since picked +22.00
Chart = http://www.splittrader.com/charts/charts.asp?symbol=JDSU
VERT - VerticalNet Inc. $251.73 (+25.98)
Business-to-business companies are once again in favor with
momentum traders, as shares of Ariba (ARBA), Commerce One (CMRC),
Chemdex (CMDX) and VerticalNet (VERT) all turned sharply higher
during the past week. Even Priceline.com (PCLN) announced their
intention of moving into the B2B sector. The catalyst for last
week's surge was the Robertson Stephens Tech Conference, as
analysts came away enthused about potential growth in the sector.
Coming up, Merrill Lynch is sponsoring an B2B conference on March
15th. There is still plenty of time to enter this split run play.
New positions can be entered near support or on a move over
resistance. VERT closed on great volume in a breakout move
Friday. The stock closed just over $250, so it will be
interesting to see if the move can continue, or if some
consolidation will occur near this level. Support levels are now
$250 (light) and $245 (better.) Resistance is $252, then $260.
Our target date is the 3/31 payable date.
Picked on Feb 24th @ $221.00
Change since picked +30.73
Chart = http://www.splittrader.com/charts/charts.asp?symbol=VERT
SPLIT RUN PLAY DROPS 03/05/00
DISH - Echostar Communications $121.44 (+11.94)
Thursday, we were concerned. Friday, we were jubilant! Our
short-term strategy paid-off! The pre-earnings excitement for
this stock was delayed, but it came in time for us to do quite
well on the play. As we warned Thursday, we dropped DISH at
Friday's close, because the company is reporting earnings Monday
morning. We don't like the downside risk that earnings can bring.
Since the split payable date is 3/22, we hope to re-enter the play
later in the week if an opportunity arises.
Picked on February 29th @ $114.00
Profit/Loss +7.44 (+7%)
Best Profit +9.38 (+8%)
Chart = http://www.splittrader.com/charts/charts.asp?symbol=DISH
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