Email Version, Section 1, Tuesday, 07/18/2000
The SplitTrader.com Newsletter Tuesday 07/18/2000 1 of 1
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In This Newsletter:
Market Commentary - Economic Data Overrides Earnings
Definition of the Day
Tuesday's Split Announcements - UVN, INCY, PROX, and MER
Sector Watch - Breakdown by sector of market performance.
Wednesday's Play-of-the-Day - None chosen
Plays - New - Updates - Drops
Economic Data Overrides Earnings
There's nothing like a hot economic data set to cool an
investor's jets. Before the opening bell today, the Bureau of
Labor Statistics released its Consumer Price Index (CPI) for
June. The CPI, a measure of inflation at the consumer level,
advanced 0.6 percent for June, 0.1 percent ahead of the 0.5
percent consensus estimate. However, the core rate, which
excludes food and energy (you know, the stuff that most
impacts your wallet), matched estimates with a 0.2 percent
The stronger-than-expected increase comes on the heels of a
relatively tame 0.01 percent increase in May. The principal
cause of this large inter-month surge was energy. Gasoline
prices jumped 8.8 percent in June, the biggest increase since
March. This, in turn, forced the pump price up to a
nationwide average of $1.71 per gallon.
So, after a four-day surge that that saw the Nasdaq Composite
Index (COMPX) advance over 300 points, investors finally had a
good reason to do a little profit-taking. And profit-take
they did. When the closing bell sounded, the COMPX was down
97.50 points, or 2.28 percent, to 4,177.17.
In addition to suffering from a little inflation anxiety,
investors were also on edge because of slew of big-cap tech
earnings due after the close. Microsoft (MSFT) traded flat
for most of the day, closing up $0.31 to $78.50. However,
after the close, the software king reported earnings of $0.44
per share, beating the First Call estimate by $0.02 and the
whisper number by a penny.
Meanwhile, chip making giant Intel (INTC) closed off $3.31 to
$143.00 in anticipation of its earnings, which, like
Microsoft, didn't disappoint. The company posted a profit of
$3.5 billion, or $0.50 per share (figures are adjusted to
reflect a 2-for-1 stock split set for July 30), beating the
First Call estimate by $0.01.
Still, despite today's 2 percent drop, the COMPX remains
healthy from a technical perspective. The index is displaying
a strong upward trend, with today's decline actually receiving
support from the upward-sloping trend line. What's more, the
index remains 110 points above its 150-dma of 4,067 and over
300 points above its 200-dma of 3,831.41. The COMPX's subdued
volume today could also be interpreted as a technical
positive. Only 1.47 billion shares changed hands today, an 8
percent decrease from Monday's level, which means there wasn't
a mad dash to take profits during the sell-off.
Chart of the Nasdaq Composite:
As for the old-economy issues, the action was equally as
languid, if not as dour. The Dow Jones Industrial Average
(INDU) lost 64.35 points, or 0.60 percent, to 10,739.92.
Pressuring the INDU (besides Intel) were some of its older
components. Kodak (EK), Caterpillar (CAT), International
Business Machines (IBM) and Hewlett Packard (HWP) all suffered
losses of at least $2 or more.
Technically, the INDU offered little encouragement. Volume
was anemic, with just over 900 million shares changing hands
on the NYSE, and breadth was bad, with decliners beating
winners by a 17 to 12 by a margin. Moreover, the INDU appears
to have run into resistance at the 10,850 level, while, at the
same time, falling through its 150 and 200 day moving
Chart of the Dow Industrial:
As for the broader and smaller markets, they mirrored trading
on the COMPX and the INDU. After fours days of gains, both
the S&P 500 Index (SPX) and the Russell 2000 Index (RUT)
reversed course. The SPX lost 16.75 points, or 1.11 percent,
to 1,493.74, while the RUT lost 8.90 points, or 1.63 percent,
In stock news, earnings continue to dominate the headlines.
Chipmaker Rambus (RMBS) posted third-quarter earnings of $0.04
per share after the market's close, matching the First Call
estimate. However, ahead of the news, the company's shares
slipped $6.63 to $101.88.
Other chipmakers posting earnings today included Lattice
Semiconductor (LSCC), Novellus Systems (NVLS) and Applied
Materials. All three reported analyst-beating earnings, but
all three finished the day in the red. Semiconductors sector
took it on the chin today after Merrill Lynch advised its
clients to lighten up on the sector.
If the investor disdain seemed a little excessive in the chip
sector, look at how some other tech issues faired after
reporting earnings today.
Shares of network equipment maker Copper Mountain Networks
(CMTN) were obliterated, falling $29.50 to $94.19 despite
reporting earnings of $0.24, two cents ahead of the First Call
estimate. But according to UBS Warburg analyst Anton Wahlman,
some investors expected the company to earn as much as $0.35
Another networking/earnings loser was Efficient Networks
(EFNT), which wasn't so efficient today. The company lost
$13.00 to $89.00 after reporting a loss of $0.16 per share, a
penny worse than the First Call estimate of $0.15. On the
other hand, if revenues, and not earnings, are you're favorite
high-tech barometer. Efficient did post revenues of $101.9
million for the quarter, a 1,223 percent increase over the
year-ago period. Does that help? I didn't think so.
How about Digital Island (ISLD), could it buck the negative
high-tech earnings trend? No. Shares of the software maker
tumbled $6.56 to $38.06 after reporting a loss of $1.51 per
share. Granted, a buck-fifty loss might not be a cause for
celebration, but it still beat the First Call estimate by
Meanwhile, Unisys Corp (UIS) had the dubious distinction of
posting the largest percentage decline on the S&P 500. The
former mainframe stalwart fell $2.75 to $11.38 after posting
earnings of $0.18 per share compared to the First Call
estimate of $0.19. Hard to believe the company could hit the
estimate, considering it had just revised its earnings down
just last month.
Among the Dow Jones Industrials reporting today, General
Motors (GM) added $0.44 to $60.61 after posting second-quarter
earnings of $2.93 a share, and drug maker Johnson & Johnson
(JNJ) inched up $0.66 to $95.00 after posting second-quarter
earnings of $0.94 per share
Finally, the law profession's cash cow, Philip Morris (MO),
added $0.44 to $24.06 after posting second-quarter earnings of
$0.95 a share, matching the First Call estimate. Big MO made
$0.85 per share in the year-ago period.
So far, 25 percent of the S&P 500 companies have reported
quarterly results. According to First Call, operating profits
have grown an average 15.8 percent compared with the long-term
average of 2.9 percent. Furthermore, of the companies that
have reported, 63 percent have beaten expectations, 32 percent
have met them and 5 percent have fallen short.
Looking ahead to tomorrow, some technicians are looking at
today's decline in the tech leaders as a market positive,
reasoning the pullback will give short-term traders logical
points from which to initiate a trade or accumulate a
position. Even if that's not the case, the consensus opinion
is that worse is behind the COMPX and there is little
likelihood the index will test its 200-dma anytime soon.
One thing is for sure, though, earnings will continue to take
However, over the next day or two, traders will likely remain
tentative, regardless of how robust earnings are, ahead of
Alan Greenspan's congressional testimony on the state of the
economy this Thursday.
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Definition of the Day
The Retention Rate refers to the percentage of net earnings, or
after-tax profits, that are available to be re-invested in the
company after dividends have been distributed to shareholders.
For the complete definition, please go to:
Tuesday's Split Announcements
Tuesday, July 18, 2000 After the Market
Es Televisión! Univision Stock Split Follows Earnings Release
After the close of market, Univision Communications Inc.(NYSE:
UVN) announced that its Board of Directors approved a two-for-one
stock split of the Company's common outstanding shares to be paid
in the form of a 100% stock dividend. The distribution of the
additional shares is set for August 11, 2000 for qualifying
stockholders, and shares are expected to begin trading split-
adjusted on August 14, 2000.
For the complete announcement, please go to:
Tuesday, July 18, 2000 After the Market
Second Quarter Earnings Result in 2:1 Stock Split for Incyte
The Board of Directors of Incyte Genomics, Inc. (Nasdaq: INCY)
announced a two-for-one stock split and better than expected
earnings, following the closing bell today. The stock split will
be issued in the form of a 100% stock dividend payable to
eligible shareholders on August 31, 2000. This will mark the
second two-for-one stock split in the Company's history.
Currently there are 200 million shares authorized with 32 million
shares outstanding, and a float of just 26.1 million.
For the complete announcement, please go to:
Tuesday, July 18, 2000 After the Market
Stock Split is Triggered by Proxim's Outstanding Growth
Amidst the multitude of companies releasing earnings today,
Proxim, Inc. (Nasdaq: PROX) announced after the bell that its
Board of Directors approved a two-for-one stock split of the
Company's common outstanding shares. Shareholders are set to
receive new shares on or about August 18, 2000 and the stock is
expected to begin trading split-adjusted on August 21, 2000. This
will be the first stock split for Proxim.
For the complete announcement, please go to:
Tuesday, July 18, 2000 Before the Market
Number 1 US Brokerage Declares Stock Split, Reports Q2 Profits
Before market hours today, Merrill Lynch & Co. Inc. (NYSE: MER)
released second quarter earnings and announced that its Board of
Directors approved a two-for-one stock split of the Company's
common outstanding shares.
For the complete announcement, please go to:
As of Market Close - Tuesday, July 18, 2000
Broad Market Last Support/Resistance Alert
DOW Industrials 10,739 10,450 10,850
SPX S&P 500 1,493 1,435 1,520
OEX S&P 100 807 775 822
RUT Russell 2000 536 500 550
NDX NASD 100 3,960 3,450 4,100
MSH High Tech 1,060 965 1,100
XCI Hardware 1,556 1,440 1,600
CWX Software 1,244 1,160 1,360
SOX Semiconductor 1,207 1,060 1,281
NWX Networking 1,338 1,150 1,400
INX Internet 528 470 637
BIX Banking 545 520 565
XBD Brokerage 564 480 590
IUX Insurance 638 610 660
RLX Retail 926 860 960
DRG Drug 398 385 430
HCX Healthcare 826 800 880
XAL Airline 176 154 180
OIX Oil & Gas 288 285 315
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.
Wednesday's Expirations by Payable Date
Target Corporation (TGT) splits 2:1
Energis PLC (ENGSY) splits 5:1
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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
No Play-of-the-Day chosen
NEW SPLIT RUN PLAYS 07/18/00
NEW SPLIT CANDIDATE PLAYS 07/18/00
MERQ - Mercury Interactive $108.00 +5.19 (+1.44)
Mercury Interactive is a leading provider of integrated
performance management solutions. The Company's software products
and hosted services enable businesses to test and monitor their
Internet applications which helps improve the performance,
availability, reliability and scalability of their Web sites. On
Tuesday, the stock showed signs of recovery from a profit taking
following earnings, bouncing at the century mark and finishing the
day with a gain despite a weak market. We feel that MERQ could
make a full recovery and possibly challenge its all-time high.
Earnings were strong and Merrill, CIBC Oppenheimer, and Prudential
upped their price targets on MERQ following the earnings release.
They may also announce a split at their next BoD meeting. The
Company currently has enough shares for a split with 240 million
shares authorized with 79.5 million shares outstanding and the
stock price is above historic split-levels. MERQ announced their
last split when the stock was trading at $87.63 following a BoD
meeting. Going forward, MERQ has support at the 15-dma, now up to
$103 with stronger support at the century mark. Resistance is $110
and then $115. Look for a bounce off of $103 or a move above $110
on midday volume of at least 1 million shares to open new
positions. Confirm market sentiment and sector direction before
initiating new plays. We recommend placing stops at $99 as
protection. If the stock trades above $110, we suggest moving
stops up to $104.88. Exit in the session following a split
Picked on Jul 18th @ $108.00
Change since picked +0.00
SAPE - Sapient Corporation $125.06 +7.50 (+3.06)
Sapient is one of the comeback kids as the stock has staged a
monster move from the correction lows. The April low was $54.50.
Sapient has created a niche for itself by designing custom
software for companies that wish to develop their Internet
systems. Sapient has an impressive client list that crosses over
several industries. Obviously the Internet is here to stay and
Sapient is striving to be one of the biggest beneficiaries of a
corporate environment where you need to be an Internet player or
die. Here is a shocker; Sapient is actually profitable, which may
account for some of its quick recovery. Earnings are expected to
be released on August first and the company is looking to state
profits of $0.19 for the quarter. The stock is also a viable
split candidate. The previous two 2:1 splits were announced when
the stock was trading at significantly lower prices. In May,
shareholders approved an increase in the number of authorized
shares so no further action is necessary to effect a split. Now
that the stock has rallied 150% from its lows the question is
whether it has enough momentum to carry it to a retest of its 52-
week high at $151 and change. There is very little resistance
ahead of this path and with the stock closing almost on its high,
a little pop tomorrow and the stock could easily be on its way.
This is a risky play because of a low float and small average
daily volume of just over 500 K. Therefore it does not take much
to move this day trader's favorite. The MACD is positive but may
be a bit ahead of itself but Money Flow and OBV are both very
strong and are indicating that the rally could continue. The RSI
does have a little room to go higher before signaling a sell
signal. We are setting our initial stop at $118.00. Long term
support can be found all the down at $103.88, which is the 50-DMA.
We will exit this play if there is a split announcement or just
before earnings, whichever event occurs first.
Picked on July 18th @ $125.06
Change since picked +0.00
SSSW - SilverStream Software Inc. $58.00 -0.75 (+0.56)
SilverStream Software announces the availability of a "suite" new
deal. On Monday, SilverStream (SSSW) announced the availability of
SilverStream ePortal, a complete suite of eCRM (Electronic
Customer Relationship Management) software for building e-business
solutions. SSSW is a global provider of software and services that
enable businesses and other large organizations to create deploy
and manage software programs for Intranets, extranets and the
Internet. We begin our coverage of this play ahead of earnings,
which are scheduled for July 24th. Expectations are for a loss of
33 cents per share, versus a loss of 37 cents in the same quarter
last year. We see SSSW as a split candidate at $70.00 and with 100
million shares authorized and no previous split history, we see no
problem for an announcement with earnings. The company has beat
earnings expectations in the last two quarters. On Tuesday the
stock suffered a minor loss along with the broader markets after
inflation fears resurfaced after the release of the CPI numbers.
The stock has now found firm support at the 5-dma at $56.00, below
that we measure the next support at the 20-dma at $52.00. Looking
overhead we see resistance will likely be challenged at $60.00 and
then at the 200-dma at $67.00. In order for any real gains to take
place we will want to see conviction ramp up in the volume.
Average volume is 211K shares but breakouts have been recorded
with more than 500K shares changing hands. Ahead of next Monday's
earnings we will want to see increased volume in the stock,
positive momentum in both the NASDAQ and the Computer Sector
(IXCO). Open new plays with a strong bounce off support on good
volume. This will be a short-term play for us, as we will exit
ahead of Monday's earnings release. Additionally, should things go
awry we will place a protective stop at $52.00 to limit our
Picked on July 18th @ $58.00
Change since picked 0.00
VRSN - Verisign Incorporated $179.13 -7.94 (-12.88)
Business transactions on the web can be a risky proposition for an
unprotected, unsuspecting e-business website. The problem: the
expansion in email, the Internet and corporate networks has
enabled the hacker to target a greater number of unprotected
online businesses. The simple solution? Have VRSN develop a
tailor-made electronic commerce network for stopping the problem
before it starts. With a strong business model and increasing
revenues, we're hoping some new buyers will help generate a near-
term advance. Currently, steady buying from investors has helped
to push shares higher and are currently in between their 2 most
recent splits ($236.69 and $118.50). And although the company
currently has 115.4 million shares outstanding with 200 million
shares authorized, not enough for a 2:1 split) the BoD's may
consider authorization of additional shares if prices continue to
climb. Most recently, shares have consolidated over the last
couple of days, effectively closing an earlier gap up from
$177.69. Along with closing the gap, the stock has come down on
weaker than average volume (less than 4.3m shares traded). With
the 20 and 30-dma's ($173.08 and $174.37), we'll be looking for a
strong reversal off this level to trigger our initial entry. So
the stock will need to hit $174 before we open any new positions.
If the stock can produce an advance, then we'll look to the double
century mark ($200) for opposition. We recommend setting stops at
$169 because the market may not be so agreeable. Confirm your
entry point when VRSN can reverse from support ($174) on good
volume. We'll plan on using support and resistance to dictate our
buy/sell points, before exiting the stock by the close of 7/26,
for the earnings report. Remember this play will not initiate at
the current price; the trigger for entry is $174.
Picked on July 18th @ $174.00 (Pending execution)
Change since picked 0.00
SPLIT RUN PLAY UPDATES 07/18/00
SPLIT CANDIDATE PLAY UPDATES 07/18/00
AMGN - Amgen $74.86 +2.48 (+4.09)
Amgen held up pretty well on Tuesday. Shares of AMGN traded as
high as $76 but could not break through resistance at $76.50, the
stock's all-time high. AMGN closed the session with $2.47 gain on
average volume. The stock has now made 3 higher lows and it could
be ready run as we are just 6 sessions away from the earnings
announcement, scheduled for 7/26 after the bell. We are looking
for a split announcement with the release. Amgen has enough shares
for a split and the stock is trading around historic split levels.
Their last split announcement came with an earnings report when
the stock was trading at $86.13. Until then, AMGN has light
support at $74 with stronger support at the 10-dma, now at $73.
Place stops at $72.44 to lock in gains. Move stops up to $74 if
AMGN trades above $76. Resistance is $77, just above the all-time
high, and then $80. Open new positions on a bounce off of $74 or a
move above $76 on midday volume greater than 4 million shares.
Confirm market direction and sector momentum before starting new
plays. Look to exit no later than 7/26.
Picked on Jul 16th @ $70.75
Change since picked +4.09
ANDW - Andrew Corporation $33.19 +0.38 (+1.25)
The evolution of the Internet and wireless communications
into a global consumer network is creating the need for a
higher level of performance. This new standard of performance
can be defined as the need for more speed. ANDW's solution?
Strategically develop state of the art products for virtually
all aspects of voice, video and data communications. With
each new product the company develops, it seems investors and
traders keep pushing the company's shares higher. The stock
has remained on a slow but steady upward course so far this
week, on route to resistance at the 50-dma of $34.11. With
earnings out on Thursday morning, and our exit by tomorrow's
close, we'll now look for the 50-dma as a level to take
profits. However, if we get an advance just under this level,
we recommend placing a tight trailing stop, should sudden
reversal send prices lower. For intra-day plays, we'll be
looking to make quick profits if ANDW can generate a sharp
bounce from support at the 5-dma ($32.24). We believe that
selling a stock while holding a profit is better than trying
to get additional gains with an increased risk of losing your
profits. Design exits ahead of Wednesday's close, since
earnings are due out Thursday morning.
Picked on July 13th @ $31.94
Change since picked +1.25
CSCO - Cisco Systems $67.25 -2.38 (-1.00)
Cisco System's resistance became the market's resistance and it
might not have been a coincidence. CSCO struggled to break above
$70 yesterday, and today there was profit taking not only in the
shares of CSCO but also technology stocks in general. The CPI
numbers created the profit taking excuse. The pullback was
probably healthy for the market and not unexpected, especially
since this is options expiration week which usually sees an
increase in volatility as major market participants unwind their
positions. CSCO may get a little boost tomorrow as fellow
technology bellwethers INTC and MSFT both reported decent numbers
after today's close. However, AAPL also reported and beat the
Street by a penny but it is currently down five points. The most
likely scenario for tomorrow is a little follow through to the
downside with a bounce and some overall market stability later in
the day. CSCO needs to consolidate just a little bit and gather
some strength before attacking the $70.00 resistance level. We
will continue to protect ourselves by raising our stop to $66.88,
which is just below today's low, because we do not want this
winner to turn into a loser. The MACD has finally turned
positive, so we like the possibility of CSCO staging another rally
late this week. The RSI still has plenty of room and has not
issued a sell signal. It is also encouraging that the drop today
was accompanied by low volume. If CSCO can rally to $71.00 we
will raise our stop to $68.00. Otherwise we will exit this
position before the August earnings.
Picked on July 2nd @ $63.56
Change since picked +3.69
HGSI - Human Genome Sciences $161.81 +2.44 (+8.56)
Human Genome took a bounce and put this play in the green. On
Sunday we began this play by noting a charting pattern known as a
long legged Doji which indicated a possible turn around. On Monday
the stock did in fact bounce off a moving average and headed
higher. On Tuesday the company known for research and development
of novel proprietary pharmaceutical and diagnostic products based
on the discovery and understanding of the medical utility of
genes; traded higher again. Volume for the day came in slightly
higher than average at 2.07 million shares. The company is due to
report earnings in just over a week on 7/27. Despite selling
across the markets on Tuesday, HGSI did especially well as did the
Biotech sector. On Monday the stock opened and bounced off the 20-
dma and has traded higher since. Currently we see support just
below at the 10-dma at $161.50 followed by the 20-dma at $151.
Upstairs we see resistance at $170 and then up at $185. Open new
plays with a bounce off immediate support or a decided move up
with good volume and support coming from the NASDAQ and the
Biotech (BTK) Index. Any further concerns about inflation and any
possible action by the FED in August may cause investors to
continue the selling. If this is the case expect that Biotech's
will get hit too. For that reason we will tighten our stop to
$158.75 to lock in a profit. However if the stock moves up over
$166, we will adjust that stop to $161.
Picked on July 16th @ $153.25
Change Since Picked +8.56
LAMR - Lamar Advertising Company $46.38 -0.23 (3.68)
Try not to stare while driving, but that billboard you're
looking at could be one of LAMR's 50,000 outdoor advertising
structures. Internally, Lamar has been able to decrease its
operating costs with consolidation, and has also been able to
increase the quality and appearance of its billboards through
the use of vinyl and new digital printing techniques. Each of
these internal improvements has translated into more
recognition for the stock and better profits for
shareholders. During today's trading session, the stock
stayed within Monday's range and looks to be finding near-
term resistance at $47. This level will present our initial
resistance point, with tougher opposition waiting higher at
$50. Reinforcing the $50 mark, the 200-dma of $51.15, rest
just higher. Given the strength of opposition at these
levels, we'll be setting our price target for $49. For
support, we'll anticipate the 100-dma ($44.68) a potential
entry point, should the stock reverse sharply from it.
Secondary support is sure to follow at $43, bolstered by the
50-dma ($42.97). Should the stock break these 2 major support
levels, we feel that a stop at $42 will be necessary to
protect against further weakness. With earnings on 8/2, we'll
be using support and resistance to target our buys/sells.
Picked on July 16th @ $46.75
Change since picked -0.38
NT - Nortel Networks $78.06 -2.13 (-1.06)
Deals, deals, and more deals. This week, NT signed contracts with
Telestra (TLS)and Telefonica subsidiary, Emergia. They also
extended the terms of a previous contract with Williams
Communications (WCG). Shares of NT hit an all-time high of $80.38
on light volume during Monday's session. On Tuesday, NT fell on
tech sector profit-taking and general nervousness going into this
week's major earnings announcements. Towards the end of the day,
CS First Boston came out and reiterated their "strong buy" rating
and the $100 target on NT. However, the news was not enough to
rally the stock due to the negative market action and the fact
that NT probably needed a rest. Hopefully, Tuesday's move will end
up being a test of support rather than a momentum reversal as we
are just one week away from the earnings announcement. NT is
scheduled to announce earnings on 7/25 after the bell and we are
looking for a split announcement with the earnings release. They
have an unlimited number of shares authorized however the share
price is below previous split levels. In the meantime, support is
the 5-dma at $77 with additional support at $76. Set stops at $76
to lock in profits. We recommend bumping stops up to $78 if the
stock trades above $81. Resistance is now at $81 and then $85.
Initiate new plays on a bounce off of $77 or a move above $80.
Open new positions on midday volume greater than 5 million shares,
only in a rising market. Plan to exit by 7/25.
Picked on Jul 2nd @ $68.22
Change since picked +9.83
QSFT - Quest Software $60.13 +0.13 (-1.06)
Quest Software announced Monday that CompuCredit (CCRT) has
selected Quest's Production Support and Development and Deployment
solutions to provide database development, monitoring,
troubleshooting and tuning of CompuCredit's proprietary database
applications. The news did very little for the stock. Shares of
QSFT traded to an intra-day low of $59.63 and closed just a bit
higher, at $60, on extremely light volume. On Tuesday, QSFT tried
to break out, hitting an intra-day high of $63.63 but could not
hold on to the gains thanks to NASDAQ weakness. QSFT appears to be
consolidating before making its earnings run. The Company is
expected to announce earnings on 7/26 after the bell and we are
hoping for a split announcement with the earnings release. They
have enough shares for a 3:2 and the stock is at the low end of
the split range. For now, QSFT has light support at $60 with
stronger support at $58. Place stops at $57.88 to limit losses. We
recommend changing stops to $61 if QSFT trades above $66.
Resistance is $65 and then $70. Use a bounce off of $60 or a move
above $65 on midday volume greater than 200,000 shares to start
new plays. Confirm market direction and sector momentum before
initiating new positions. Look for an exit by 7/26.
Picked on Jul 13th @ $61.19
Change since picked -3.62
TXN - Texas Instruments $70.44 -2.94 (-2.06)
When you think of Texas Instruments say CHEESE! On Monday the
world's leading supplier of digital signal processor chips
announced it has revolutionized the digital still camera market by
introducing it to fully programmable DSP-based solutions. TXN, the
world leader in DSP and analog, today unveiled the first of these
innovations, a single-chip processor that transforms the popular
cameras into multi-media Internet appliances. Another piece of
good news ahead of earnings which are scheduled for next Monday
7/24. On Tuesday the combination of four days of gains coupled
with an economic report that reignited the inflation fears; caused
the Techs to take it on the chin. Tuesday's selling was recorded
at average volume of 6.5 million shares. Looking ahead we now see
the stock poised just above support at the 5-dma at $70 with
immediate resistance just overhead at the 20-dma at $72 followed
by the 50-dma at $74. We will look for a relief rally in the days
to come indicated by good volume and a bounce off support. Watch
for the SOX Index and the NASDAQ 100 Index (NDX) to lead the way
higher. We will place a protective stop at $69 but if the stock
rallies above $76, we will adjust that stop to $72.
Picked on July 13th @ $70.88
Change since picked -0.32
SPLIT RUN PLAY DROPS 07/18/00
CHKP - Check Point Software Ltd. $250.56 -10.25 (+16.31)
A sharp advance from consolidation sent Check Point shares
running higher by 27.06 points or 11% yesterday! Volume on
that day came in strong at 3.4 million, suggesting the stock
might easily exceed resistance along $250. Once this
occurred, our trailing stop increased to $245. Today's
lower open and sharp pullback caused shares to penetrate our
stop and lock in a 4% profit. With earnings out tomorrow, our
exit by the end of the day was still in effect. With
volatility being extremely high in technology related stocks
and for more aggressive traders, we continue to recommend
using trailing stops to help lock in gains.
Picked on July 13th @ $234.94
Profit/Loss = +10.06 (+4%) (Stopped out @ $145.00)
Best Profit = +29.25 (+12%)
SPLIT CANDIDATE PLAY DROPS 07/18/00
ADI - Analog Devices Inc $83.00 -5.31 (-3.38)
Nothing in the stock market goes in a straight line and ADI got
itself caught up in stiff profit taking in the semiconductor
sector. The SOX was down 58.65 points to 1207.75 and gave up some
of its stellar gains from last week. INTC's earnings were pretty
good so we expect that chip stocks in general will probably
recover quickly. ADI should bounce soon, but we did not want to
take a chance. This selling could continue and that would offer us
a more advantageous entry point for another attempt at profiting
with a play on ADI.
Picked on July 13th @ $82.75
Profit/Loss +0.13 (+0%) (Stopped out @ $82.88)
Best Profit +5.75 (+7%)
CI - Cigna Corporation $98.06 -3.41 (-1.69)
It was not a good sign that the technology selloff did not result
in a sector rotation back into insurance stocks. CIGNA's group
rallied last week when technology stocks dropped, but this time
around the sector rotation was into pharmaceutical stocks.
Technically, CI still looks solid longer term so do not be
surprised if we jump back into this potential split play,
especially if the stock can close above $100.00 again. Maybe the
second time will be the charm.
Picked on July 11th @ $99.81
Profit/Loss -1.93 (-2%) (Stopped out at $97.88)
Best Profit +3.25 (+3%)
COHR - Coherent Inc $84.94 -2.00 (-4.25)
Timing is everything and hindsight is 20/20. Hence we now know
that we jumped on COHR a bit late in the rally. As always, it is
better to wipe out your mistakes quickly before they become
disasters. We do like the long term potential for COHR and we
will watch to see how far it can pull back into its range. Do not
be surprised if you see this stock back on our play list really
Picked on July 16th @ $89.19
Profit/Loss -5.31 (+6%) (Stopped out at $83.88)
Best Profit +1.69 (+2%)
EMC - EMC Corporation $79.00 -1.75 (-0.50)
A somewhat worse than expected CPI release this morning was the
only excuse traders needed to start taking some profits out of
what has been a very nice run for technology stocks. We were a
little disappointed that EMC took its sweet time before joining
the move but by stopping out at $78.00 we managed to extract a
little profit. EMC reports their quarterly results before the
market opens tomorrow so we would have been exiting this position
on the close if we had not been stopped out.
Picked on June 28th @ $75.25
Profit/Loss +2.75 (+4%) (Stopped out @ $78.00)
Best Profit +7.19 (+10%)
FDRY - Foundry Networks $124.13 -6.75 (-6.88)
Foundry Networks announced earnings on Tuesday after the bell. The
Company posted revenue of $88.8 million compared to $70.0 million
last quarter and $24.1 million last year, representing 27% growth
and 269% growth, respectively. Net income was $23.5 million or
$0.19 per share, beating the analysts' estimates of $0.16 per
share. The stock was trading at $114 after hours. However, this
information is irrelevant to us as we are long gone. We were
stopped out at $129 on Monday afternoon. If you still have open
positions, you may get lucky with a possible split announcement
following their BoD meeting tomorrow.
Picked on Jul 13th @ $121.69
Profit/Loss +7.31 (+6%) (Stopped out @ $129.00)
Best Profit +14.06 (+12%)
GSPN - GlobeSpan Incorporated $139.12 -6.62 (-6.88)
Well you win some, you lose some, and some get stopped out. So it
goes with GSPN, we were hit on our stop set at $139 on Tuesday
afternoon late in the trading day. Strong CPI numbers did not bode
well in the minds of investors as inflation fears flooded the
market. We will continue to watch GSPN as it draws closer to their
July 31st earnings and may reinitiate coverage at a later date.
For now we exit with a small loss.
Picked on July 16th @ $146.00
Profit/Loss -7.00 (-5%) (Stopped out @ $139.00)
Best Profit +2.13 (+1%)
KANA - Kana Communications $62.81 -5.38 (-7.63)
KANA has dropped back into its up-trending channel. Although
there was not any severe technical damage, we opted to protect our
quick profits and allowed ourselves to be stopped out. Look for a
bounce at about $60.00 if you want to keep watching this play. A
move below $60.00 would break the up channel and could be
hazardous for bulls.
Picked on July 2nd @ $61.88
Profit/Loss +4.12 (+7%) (Stopped out at $66.00)
Best Profit +12.75 (+21%)
LSI - LSI Logic Corporation $55.75 -4.25 (+3.75)
Out Out Damn Stop. Perhaps if Macbeth had been a play about day
trading this title would have fit. But alas we are talking about
getting stopped out of LSI at $58.50 and we are now OUT of this
stock. We will watch LSI as it approaches earnings on 7/25 and may
find another reason for a new play. Util then we will exit with a
Picked on July 13th @ $56.00
Profit/Loss +2.50 (+4%)
Best Profit +5.50 (+10%)
SANM - Sanmina Corporation $97.25 +0.25 (+0.31)
We exited this play on Sanmina ahead of earnings at $97.06
(Monday's close), which were reported after the bell on Monday.
Despite SANM reporting record earnings for the quarter, we hold
fast to our policy of not holding a position through the earning
announcement. We exited with a profit and will watch SANM for
future opportunities in the near future.
Picked on July 9th @ $91.00
Profit/Loss +6.06 (+7%) (Stopped out @ $97.06)
Best Profit +9.38 (+10%)
SBC - SBC Communications Inc. $43.50 0.22 (-1.88)
With two consecutive closes above its 200-dma late last week,
SBC opened sharply under this level and sold to our stop of
$43.88. With the lack of any news, it looks as though general
weakness in the telecom sector was the cause of the drop. We
mentioned in a previous write-up that the $45 level might be
a good place to lock in profits if volume was below average.
As it turns out, this strategy would have worked the best.
We'll keep you updated on this sector, as growth in DSL lines
promises to provide additional future plays.
Picked on July 9th @ $44.69
Profit/Loss -0.81 (-2%) (Stopped out Monday @ $43.88)
Best Profit +1.19 (+3%)
VIA - Viacom Incorporated $67.31 -2.88 (-4.38)
Finding plenty of resistance near its previous high, VIA gave
a swift pullback yesterday and hit our stop of $67.88 on good
volume (507 thousand shares traded). It's no surprise that
yesterday's weakness was followed by additional selling
today. Without any negative news tied directly to the
company, we think that firm resistance near the $70 mark was
likely the main reason for the pullback. With strong future
prospects and a great line-up of businesses, we believe that
VIA will present us with many additional upcoming plays.
Picked on July 16th @ $71.69
Profit/Loss -3.81 (-5%) (Stopped out Monday @ $67.88)
Best Profit +0.12 (+0%)
XLNX - Xilinx Incorporated $91.63 -5.00 (-3.81)
On Monday we were stopped out of XLNX when the stock violated out
stop which we had set at $92.88. Just minutes into the trading day
the southern bias of the stock triggered out stop. We will watch
XLNX as it nears earnings later this week and may announce a stock
split. We may initiate coverage of this stock at a later date.
Picked on July 13th @ $92.63
Profit/Loss +0.25 (+0%) (Stopped out @ $92.88)
Best Profit +5.37 (+6%)
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