Email Version, Section 1, Wednesday, 10/04/2000
The SplitTrader.com Newsletter Wednesday 10/04/00 1 of 1
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In This Newsletter:
Market Commentary - Who Wants to be a Millionaire?
Definition of the Day
Wednesday's Split Announcements - None
Thursday's Play-of-the-Day - DY
Who Wants to be a Millionaire?
Is this a bottom or just one more bounce? Give us your final
answer, and if it is right you could win a million bucks, get
it wrong and you wind up missing out on the big money.
The market started out again to the down side today, as it has
so often over the past six weeks. Still suffering from the
impact of the bombing in the wake of the cryptic Federal
Reserve meeting yesterday, the futures this morning looked
down. The NASDAQ Composite Index (COMPX) complied with ease,
dropping down to 3,382.53, a cool drop of 73.3 points and
penetrating the 3,400 support within an hour of the open.
From there, the COMPX played catch-up, getting as high as
3532.43 before settling at 3,523.10 with a 67.27 gain on 2
billion shares exchanged.
Meanwhile, the Dow Jones Industrial Average (INDU) took a few
minutes of pause and then climbed above 10,800 to 10,825 for a
gain of 106 while the COMPX was bottoming. From there the
INDU drift lower and at the close added 64.74 to 10,784.48.
NYSE traded nearly 1.2 billion.
Decliners beat advances on the NYSE by a 15 to 12 margin and
by a 21 to 18 margin on the NASDAQ. However, there was more
buying than selling, as the up volume beat down volume on the
NYSE 59 to 55 and on the NASDAQ 12 to 9.
The morning looked bleak after Knight Trading (formerly
Trimark) (NITE) warned that it would miss estimates due to the
problems with the NASDAQ and its expansion overseas. NITE
gapped down almost $8, or 23%, to $24.75 at the open. It
closed at $28.50, a drop of $3.69.
Oracle (ORCL) was still weighing on traders from yesterday's
$10 drop and added another $9 on the down side just after the
open. Yesterday, ORCL had a meeting with analysts and they
were not impressed. One analyst said he did not like the body
language of the CFO, saying it sent a bad signal. But ORCL
began recovering and this afternoon the company came out and
said it was on track to meet all there estimates, which took
the stock as high as 70.75. ORCL was the most active on the
NASDAQ, trading 102 million shares before closing at 68.13,
Computer Associates (CA) also issued an earnings warning and
rose $3.63 to $28.06. Analysts figured that the warning was
better than they thought, so they bought to stock.
The book on Amazon.com (AMZN) added another chapter today, as
Robertson Stephens issued a report this morning that under
their current business model AMZN can't make money. Investors
found it under fiction and bought the stock anyway, sending
the stock up $0.94 to $36.00 on average volume of 7.8 million
Microsoft (MSFT) held down the second most active slot but
continued its slide, hitting a new low at $54.50 on more than
double average daily volume of 68.2 million shares and closed
down $1.13 at $55.43.
Unlike Microsoft, the other NASDAQ generals, Intel (INTC) and
Cisco (CSCO), both rose after recent down trends.
Over on the NYSE the cyclicals and fundamental stocks took off
to extend their rally off multi-year lows, as oil companies
fell on a drop in oil prices. Dupont closed up $1.00 to
$45.38 on almost double average daily volume (ADV).
Meanwhile, Proctor & Gamble (PG) gained $1.43 to $70.25,
Boeing (BA) gained $1.25 to $61.13 and Home Depot gained $1.75
to 55.56 all on higher volume.
After the close, Dell warned that it will meet estimates, but
overall sales may be slower. At market close the stock was at
a closing low and intra-day hit a new low of $26.31. During
the day Dell traded 55.5 million shares.
Also after the bell, Harmonic (HLIT) warned of lower earnings
and dropped $8 in after-hours trading. The box makers were
already dissected after the Apple Computer (AAPL) warning last
week, so Dell may not have a big impact, but HLIT is in the
Optical sector and this may have impact on that highflying
Pitney-Bowes (PBI) copied XRX tonight and issued a warning
saying it would miss earnings by about 3 cents. PBI was
already hammered in the wake of the XRX warning.
The market learned today that more people said "Pepsi please,"
as its earnings beat estimates by $0.02, coming in at $.82.
Last year's take was $0.59 per share. Still, the joy-of-cola
lost $0.88 to $45.13 on the day.
After the market closed Micron Technology (MU) reported
blowout earnings of $1.20 compared to analysts estimate of
$0.96. The stock moved up $5 from a close of S43.06 to $48
and change. That may mitigate some of the impact from Dell
for at least the semiconductor sector.
The 30-yr bond traded in a narrow range, closing at its low
for the day with a yield of 5.947%. Oil prices dropped. The
Euro has climbed off its low, but still is worth only $0.87.
How much farther down can the market go? Some traders and
analysts see the market as greatly oversold. The problem is
that most days the market has opened up and then slowly eroded
during the day, ending with a flush that makes it difficult to
trade. This hasn't given the market the purge of seller's it
needs to find a bottom. On the other hand, how much farther
down does it need to go? The reason the market dropped and
failed to rise as the FED tightened interest rates was in
expectation of the slowing we are now seeing. With that drop
and the latest drops we've had accompanying the actual news of
the effects, when does the news get fully discounted?
Apparently, the belief that the Fed would change its stance to
a "neutral" bias was widely expected and a big disappointment
yesterday when it didn't happen. The effects of the rate
hikes are only now beginning to impact the economy with
slowdowns in retail sales, home construction and borrowing.
Normally, the market anticipates events and these events were
already anticipated. Investors will be looking for some sign
of easing so that anticipation of new growth can start an up
Investor sentiment is negative. Many believe that once actual
earnings begin to be released and they show upside surprises
the market will turn. October is also the month the markets
usually bottom and new up trends begin. Money is waiting on
the sidelines to jump in and has been coming in selectively.
Earnings season begins in earnest next week and we will soon
learn where the bottom is.
OCTOBER OPTIONS WORKSHOP EXPO
DENVER - Oct 27-30th
Just a few spaces left. Don't miss this spectacular event.
Sign up today! http://www.optioninvestor.com/workshop
Have you taken the time to see what you will be missing?
This is a power packed event from morning till night.
Check out the outline:
Here is the quest speaker list:
Steve Nison - Steve Nison is not only the world's foremost
expert on Candlestick Charting techniques, he's the author
of the two top selling, definitive books on the topic:
Japanese Candlestick Charting Techniques and Beyond
Candlesticks. He has trained and lectured investors and
investment firms around the world on how to integrate these
methods into their investment strategies.
Steve will be speaking on "Spotting Early Reversal Signals."
Gregory Spears - Author of the Spear Report. Gregory developed
a unique "consensus" concept for picking stocks in the early
90's while trying to make sense of the myriad of financial
newsletters in his mailbox. His unique "consensus" system has
developed an average gain of 100% for his recommendations over
the normal holding period which is about six months. The Spear
Report is quoted or featured in dozens of financial
publications and Greg's financial workshops are "standing room
Greg will be speaking on the top market gurus, "What they are
saying and why they are wrong."
Dick Arms - Richard Arms is the inventor of the Arms Index,
otherwise known as the TRIN. He has been analyzing the market
for over 35 years and is a constant visitor to CNBC as a
market commentator. His work in technical analysis is older
than most of the brokers now trading with his tools. His
newest invention is the Equivolume charting system, the first
new charting system since the 1930s.
Dick will be explaining the TRIN and how we should use it to
trade as well as his new Equivolume charting system. This will
be an interactive session with plenty of attendee questions
that Dick will answer.
Stan Kim - Stan has a MBA from UCLA and worked for IBM for
many years. He realized he did not want to work for anybody
else and did not want anybody working for him. He has been a
full time trader ever since. He is the founder of the Snail
Trader system of trading and is currently working on a new
book. Stan consults and mentors traders and investment firms.
His topic will be, "How to Trade for a Living When You Are Not
a Stock Guru."
Jim Crimmins - Jim is president of TradersAccounting.com and a
noted authority on tax issues for traders. Jim is an expert on
gaining Trader Status and puts on seminars on "Tax Free
Trading" around the country. If you have been to a money show
you have probably seen Jim with flocks of people around him.
Jim IS the authority on tax accounting for traders! Jim will
be speaking on Trader Status, Mark to Market and IRS do's and
don'ts for traders.
Add to this distinguished list above the fifteen plus speakers
from OptionInvestor and you have an event you cannot afford to
The current roster of staff instructors includes:
Ryan Nelson - Managing Editor, OptionInvestor.com
Chris Verhaegh - Options 101/102 Writer and Option Strategist
Steve Rhoads - Technical Analysis Instructor
Molly Evans - OIN Staff writer
Lee Lowell - OIN Staff writer
Austin Passamonte - Editor IS, Staff Writer
Buzz Lynn - Editor, Sector Trader, Staff Writer
Mark Phillips - Leaps Editor, OIN
Vince Dowd - Spreads Specialist
Louis Horkan - Managing Editor, Premier Investor
Steve Pekarek - Editor, SplitTrader.com
Jeff Bailey - Editor, Premier Markets
Matt Russ - Editor, OptionInvestor.com
Jim Brown - Head Option Guy
For a course outline click here:
The workshop is scheduled for the last weekend in October.
Four days of intense, power packed option education.
This is not your standard seminar. We start by putting you up
in a luxury hotel and feeding you five times a day. We feed
your mind from a fire hose as well with more than 15 speakers
and special guests to educate you on every option strategy.
There is something for everybody. Just mingling with over 15
professional option traders for four days is worth the price
of admission. The entire weekend for the low price of $3795.
All meals, snacks and favors are provided and you will get a
professionally produced set of videos of the entire weekend.
Need we say more? If you want to learn how to be a better
trader, making more and losing less then you should come to
this seminar. We guarantee you will not be disappointed!
For more info and to sign up:
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FALL SEMINAR SCHEDULE
The Austin TX seminar is September 21/23rd. Options
expiration is over and earnings still several weeks
away. Here is your chance to learn from the pros. The
three day Technical Analysis Stock and Option Fall Seminar
Series. Three days of indepth education. Don't miss it!
Some comments from recent attenders:
I want to thank Chris, Steve and Scott for the excellent workshop
held in Detroit last week. Having been to the Expo in Denver in
March (which was fabulous), I was ready for a smaller, hands-on
approach to hone my less-than-perfect skills. I was not disappointed.
One can never get too much education in options investing, and Chris
and Steve offer terrific, unique approaches. Laurie
Chris & Steve, I would like to thank both of you for a great
experience at the Atlanta Workshop. I learned more in the
three days of the workshop about investing and trading than
all of my undergraduate and graduate courses combined. It
was a lot of information in a short time and I hope to put
it to use very soon. Mike
I attended the Atlanta seminar and wanted to forward my positive
comments. The seminar "really lit my fire". I have been a trader
for 20 years and often go to seminars and this was the first one
that really taught me the most. Dr Lloyd
Jim, I had the good fortune of attending the meeting in Orlando.
Like your newsletter, it was a CLASS ACT. Chris and the others did
a great job. Chris was by far the best performer but the gentlemen
beside me was an option trader with several seminars under his belt
and almost freaked out when Chris finished his Index Presentation.
I am writing this note to compliment you and your staff on the
great job they did in Atlanta. But more importantly I would like
to single out Steve Rhoades as one of the finest speaker/teacher
on technical analysis that I have ever had the pleasure of hearing.
I am doing my best to persuade other members of the two investment
clubs that I belong to, to attend the Detroit seminar.
We guarantee you will not be disappointed. The class size
is small so you will get plenty of individual attention
from Chris Verhaegh, Steve Rhoads and staff.
At less than the cost of a bad trade you can learn how
to analyze stocks and trade options like the pros.
Don't wait, do it now.
Oct 12-14 Charlotte NC
Oct 19-21 San Francisco
Nov 02-04 Phoenix
Nov 09-11 Miami FL
Nov 20-23 Dubai, UAE (Special 4 day seminar)
Dec 07-09 Philadelphia
Dec 14-16 San Antonio
Australia coming soon!
Has the market been beating you up? Did you give back
your gains from April? Would you like to understand
all the technical indicators our writers use? Does
the alphabet soup of technical terms like RSI, DMA,
MACD, ROC, Stochastics, Bollinger bands, sound like
Greek to you?
You can learn from the experts how to interpret all
these indicators, read charts, pick stocks and which
option strategies to use on those stocks for less than
the cost of one bad trade.
Reserve your seat now for one of our regional seminars.
Click here for more info:
Definition of the Day
Breakaway gaps usually occur upon the completion of an organized
price pattern. A breakaway gap may be best defined as a release of
pent up buying or selling pressure.
For the complete definition, please go to:
Wednesday's Split Announcements
Thursday's Expirations by Payable Date
Royal Bank of Canada (RY) splits 2:1
Human Genome Sciences (HGSI) splits 2:1
Attention Online Traders:
NobleTrading.com has become the first online trading firm to
offer both Direct Access Trading, and web based trading to its
customers. Trade Direct using any ECN, SOES, and SelectNet, or
trade right through your browser using our web based trading
application. FREE DSL service for active traders.
Visit our website and sign up for a Free real-time demonstration!
The PLAY LEGEND:
SplitTrader.com Play Recommendations.
Play-of-the-Day is our number one play recommendation for the
following trading day.
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 day,
then (change for the week).
At the end of the play you'll find:
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.
Wednesday, October 4, 2000
DY - Dycom Industries $39.31 -0.13 (-2.32)
Dycom is a leading contributor to the communications
infrastructure-building boom. They provide engineering,
construction and maintenance services to telecommunications
providers. They also concentrate on the cable business.
These activities are quite profitable for Dycom and the
Company has posted consistently solid results for years. So
why is the stock dropping? Good question. We suspect that
pending recession fears could be the main culprit. If we do
indeed suffer a recession, big capital investment projects are
likely to be scaled back. Whatever the reason, the fact
remains that Dycom sports a relatively nasty little chart. We
are only too happy to let this trend be our friend. Dycom has
been in freefall ever since the 200-DMA failed to provide
support last week. The 200-DMA currently stands at $44.66.
Volume is starting to increase during this down-phase, which
is confirmation that the sentiment is becoming increasingly
negative. The MACD is also accelerating on its decent. The
RSI is now indicating that DY is oversold, so we may see a
quick bounce. Longer term, Dycom may just trend lower because
the Money Flow and OBV are both looking pretty ugly. We are
maintaining our stop at $45.00 and you may wish to check out
our In Play section to get our trailing stop suggestion.
Dycom hovered around breakeven for most of the day today. The
occasional foray into the green was met with eager sellers.
This was positive action for us today; as we are short this
stock. Remember that shorting can be much more difficult than
going long a stock, so this is not for the faint of heart.
The market is less efficient on the short side, so be true to
your buy stops. That out of the way, the price movement on DY
is encouraging to shorts. The telecommunications sector
did fairly well today, essentially rebounding from a spate of
big down days. With this, the buying in the sector should
have buoyed DY. As this did not happen, we feel more
confident of the recent down trend. Also, Dycom just broke
through the last bit of support at $40.00 on volume of over
700,000 shares (well over the average volume of 300,000). The
next level of support is down at $35.00 where the stock gapped
up last February. If the negative sentiment prevails in the
NASDAQ and the telecomm sector, we may have more room to run
on the down side in DY. This being said, DY is now heavily
oversold according to the stochastics, so we may get a near
term bounce off of our current levels. If these bounces come
on light volume and are not of significant size, they may make
good entry points for new short positions. DY has been on a
sustained down trend for a month now, so again, no cheating on
Picked on September 29th @ $41.63
Change since picked -2.32
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This newsletter is a publication dedicated to the education
of online stock traders. The newsletter is an information
service only. The information provided herein is not to be
construed as an offer to buy or sell securities of any kind.
The newsletter picks are not to be considered a recommendation
of any stock but an information resource to aid the investor
in making an informed decision regarding how to trade stock
splits. It is possible at this or some subsequent date, the
editors and staff of SplitTrader.com may own, buy or sell
securities presented. All investors should consult a qualified
professional before trading in any security. The information
provided has been obtained from sources deemed reliable but is
not guaranteed as to accuracy or completeness. SplitTrader.com
staff makes every effort to provide timely information to its
subscribers but cannot guarantee specific delivery times due
to factors beyond our control.