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Play Updates
Tuesday, April 18, 2000
New Plays
Splits | Candidates
Play Updates
Splits | Candidates
Dropped Plays
Splits | Candidates

NEW SPLIT RUN PLAYS

NT - Nortel Networks Corporation $108.75 +7.38 (+17.13)

The strong call for optical networking equipment has allowed Nortel (NT) to produce a steady cycle of solid revenue growth. Expected to increase revenues by 21% this year, Nortel's broad base of data and telephony communications products, may soon be able to deliver the worlds first all-optical network. This optical division is currently growing 100% a year and represents the likely future of communication networks. With regard to the capital structure of the company, NT currently maintains an unlimited number of authorized shares and a float of 640m. An 2:1 split announcement came on 1/25 and when shareholders meet on 4/27, they will determine the exact payable date. Shares have matched a nice rebound with the NASDAQ composite and managed to finish up 19% from Friday's close. Though just the beginning of what may be a run back to last week's highs, we're looking for a healthy advance through $110 to get us started. Today's close over the 100-dma at $107.70 is technically positive. Challenged slightly higher up by the 10-dma at $110.70, a good volume (10.0m or better) advance through this level should send us to more resistance at $120, bolstered by the 50-dma ($121.03). On the downside, we are looking for initial support to be found at the century mark, and further down at the recent low ($88.75). Look to open positions when good volume can confirm advances through resistance or rigid bounces off support. Plan on holding positions through the shareholder's meeting (4/27), in anticipation of the payable date announcement to follow. Remember to trail your stops, to protect profits.


Picked on April 18th @ $108.75
Change since picked 0.00


NEW SPLIT CANDIDATE PLAYS

A - Agilent Technologies $87.00 +7.50 (+4.31)

Time to give Agilent another chance. When we last visited this stock it was breaking below the important support level of $100. Last week's devastating selloff has brought Agilent down to attractive levels from where it is beginning to bounce. Splitting up is sometimes hard to do but it has not been a problem for Agilent. The Company was spun off from HWP back in December at approximately $40. We have seen several successful spin-offs from major DOW stocks and Agilent has kept that trend alive by rallying all the way to $162 before running into trouble. Although Agilent has not yet split in its young history, we suspect that a rally over $100 could entice the Board to announce a split. The Company has plenty of authorized shares available to enact a split. Agilent is a huge supplier of test and measurement equipment to the technology sector. In this capacity, Agilent is a huge beneficiary of the networking boom because the Company provides much of the equipment necessary to keep networking hardware running smoothly. In a display of continued leadership in this field, Agilent today released the industry's first solution for testing IS-IS protocol performance and standards evaluation. Agilent also released the first Web- based remote diagnostic and management system for compactPCI servers. One possible stumbling block for a further advance in the shares of Agilent is HWP's planned spin-off of the remaining shares of Agilent it holds to existing HWP shareholders. This event will occur on May 2nd and it could provide a little selling pressure in the short term as it could be safely assumed that not every HWP shareholder will want to keep their Agilent shares. Nevertheless, we believe that Agilent remains oversold and we expect a snap back rally for the stock. Support was re- established at $75 and a rally to at least the $100 resistance seems likely. You can pick up shares here in the high $80's but we urge caution because the overall market could reverse very quickly. We will be exiting this position before the May 2nd spin-off.


Picked on April 18th @ $87.00
Change since picked 0.00
 


CLRN - Clarent Corporation $56.75 +8.25 (+5.87)

Putting it all together is what Clarent Corporation is all about. A leading provider of Internet protocol (IP) telephony systems, which permits simultaneous transmission of voice, fax and data over the Internet. We bring back CLRN as a split candidate with only a week to go until earnings, scheduled for 4/25. A quick look at the chart would reveal a tremendous decline from the intra-day high in March of $175.75 to Monday's low of $44.75. It appears that CLRN may have found a bottom and is staging an earnings run. In February, the stock ran 35 points going into earnings. Especially impressive was Tuesday's volume at 1.24 million shares or twice normal volume. In February, the Company increased the number of outstanding shares from 50 million to 200 million and has more than enough shares to effect its first stock split. The consensus for next week's earnings is for a loss of $0.05 with a whisper number calling for a loss of $0.04. A new play for CLRN should be confirmed with good volume and upward momentum in both the broad market and the sector. The stock is right above its 5-dma, which should now provide some support at the current level. Further support is at the half-century mark. You might want to place a stop just below this level to limit losses. Resistance is at the 10-dma at $71.59. We will be exiting this play ahead of earnings on the 25th and then look for further opportunities after that time. Should we get a split announcement with earnings, we will advise you of any split run play opportunities as they develop. Although the last two days have been refreshing, we will want to see continued confirmation of this rally in the NASDAQ and the NDX.


Picked on April 18th @ $56.75
Change since picked 0.00
 


LVLT - Level 3 Communications $82.50 +2.56 (+9.13)

Level 3 Communications engages in information services, communications and coal mining businesses in the United States and abroad. They offer systems integration services that help its customers define, develop and implement cost-effective information services, and its reengineering services convert legacy software applications into modern networked computing environments. On Tuesday morning, the Company beat analysts' estimates, posting a loss of $0.75 vs. the $1.00 loss estimates. Total revenue for the quarter rose 74% compared to the same period last year. Initially, the stock traded lower, hitting an intra-day low of $73.75. However, LVLT recovered later in the day and finished with a nice gain by the closing bell. Level 3 currently has 361.7 million shares outstanding and 1.5 billion shares authorized and they also have an Annual Shareholder Meeting on 5/22. We are looking for a split announcement in the near future or following their Shareholder Meeting. On the technical side, LVLT has support at the 200-dma at $79 with stronger support just above Tuesday's low ($74). Resistance is currently $85 and then $90. Initiate new positions on a bounce off of $80 or a move above $85. Start new plays on heavy volume, only in a rising market. Plan to exit shortly after the Annual Meeting or in the session following a split announcement. Use stops set just under support levels to protect against extended price drops.


Picked on April 18th @ $82.50
Change since picked +0.00
 


TIBX - Tibco Software $61.25 +5.31 (+12.94)

When trying to determine which Internet companies will come back from last month's massacre, we are trying to focus on those companies that have the strongest business models and the best opportunities for earnings going forward. TIBX provides infrastructure software that allows major corporations to link internal operations with customer channels. It is entirely possible that the real winners of the Internet revolution will be the "old" economy companies who become more efficient through the advances of technology. If they are going to be successful in doing this they will need the type of software that TIBX provides. One example of this was today's announcement that Delta Airlines will be using TIBX's infrastructure software for its real-time communication network. These types of contracts with highly visible S&P 500 companies like Delta, could help welcome back TIBX into the portfolios of investors. TIBX also revealed this week its next generation B2B business infrastructure software. This is a very aggressive play because the stock is clearly in a downtrend. Bottom fishing is a dicey business but TIBX does appear to be severely oversold at this point on a RSI basis and the path of least resistance could be up. There is very strong resistance at the last rally peak of $85, although the 10-dma is sitting just above at $64. We would not recommend entering a position if TIBX drops below $53, which was today's low. $50 should offer support, followed by support all the way down at Monday's capitulation low of $32.38. Earnings were reported last month. If we get a surprise split announcement, we will be exiting the position then. Otherwise, we will be exiting this position due to technical factors.


Picked on April 18th @ $61.25
Change since picked 0.00  



YHOO - Yahoo! $126.69 +12.31 (+10.69)

Yahoo! Inc. is a leading Internet media company that offers an international network of branded Internet programming that provides broadcast media, personal communications and direct services. The Company provides guides to online content, Web search capabilities, aggregated third party content, mail and community and a variety of personalization features. Yahoo! is considered to be a blue-chip Internet stock and a proxy for the entire sector. The Company announced earnings two weeks and they beat analysts' expectations, but the stock tanked following the news, trading down to an intra-day low of $108 on Monday. The stock has been making a comeback since then, hitting $127.50 on Tuesday, before the closing bell. We feel that the post-earnings depression is over and there may be a split announcement coming in the near future. YHOO has 536.6 million shares outstanding and 900 million shares authorized but it is holding an Annual Meeting of Shareholders on 5/12 and will vote on a proposal to increase the number of authorized shares from 900 million to 5 billion. We are looking for a split announcement following the Annual Meeting. Tuesday the stock closed even with the 200 day moving average, indicating the buying interest is strong and considerable upside remains. Light support is now at $120 with additional support at Monday's low of $108. There is resistance at the 5-dma, currently at $130 and then the 10-dma at $141. Use a bounce off of $120 or a break above $130 on heavy volume to open new positions. Confirm market direction and sector momentum before starting new plays. Use stops set just under support to protect profits/limit losses.


Picked on April 18th @ $126.69
Change since picked +0.00


SPLIT RUN PLAY UPDATES

EXDS - Exodus Communications $111.00 +6.50 (+25.44)

Exodus caught a nice move this week. On Monday, shares of EXDS initially traded down to its 200-dma but bounced back as the NASDAQ rallied. EXDS closed the day at $104.50 on heavy volume. The momentum continued on Tuesday as the stock traded up in step with the NASDAQ. In the news, Exodus and Microsoft (MSFT) announced that they are working together to provide e-commerce companies with core Internet infrastructure and resources. The Company is scheduled to announce earnings on 4/20, after the bell which is driving the stock right now. They already announced a 2:1 stock split with a tentative payable date of 6/20. The shareholders will vote on the stock split and an increase in authorized shares at the next Annual Shareholders Meeting on 6/6. We are now just 2 trading sessions away from the earnings announcement so there is not much time left on this play. Going forward, light support has come in at $104 with stronger support on the 5-dma at the century mark. Set stops under $100 to lock in gains. Resistance is the 100-dma at $116 and then $120. Look for a bounce off of $104 or a move above $116 to initiate new positions. Start new plays on heavy volume, only in a rising market. We recommend an exit in before the earnings release on 4/20 with possible re-entry next week.


Picked on April 16th @ $85.56
Change since picked +25.44


SPLIT CANDIDATE PLAY UPDATES

AMD - Advanced Micro Devices, Inc. $79.00 +6.38 (+13.00)

NH(V)=P No this isn't a chemistry exam, but rather the result of a stock hitting a New High, times good Volume, equals Profits. That is the story today with Advanced Micro Devices, Inc. In fact the chip sector this week has been on earnings fire with stocks like TXN, LSCC, VTSS, CY, and INTC all reporting better than expected earnings. No doubt this lead the way to AMD hitting its new high at $79.25 today. It also helps that AMD is seen as a 'value tech', after having reported great earnings last week. Volume was up 61% today at 8.26 million shares, a nice compliment to the broader NASDAQ and the NDX (NASDAQ 100) markets. AMD has a shareholder's meeting on 4/27 with a vote to increase shares and we suspect, announce a split. The past performance on AMD has been for about 10 million shares on their breakout as seen in March and April. This new threshold should be no different and we will want to see similar volume continue to confirm this new price level. Resistance is now at the new high at $79.25, with support light at $72.00 with a better foundation back at the 20- dma at $66.00. New plays should be confirmed with sector and broader market direction. Place stops back at $65.00.


Picked on April 16th @ $66.00
Profit/Loss +13.00



MXIM - Maxim $62.19 +0.19 (+11.88)

Maxim started the week in negative territory, but quickly reversed direction and moved higher. The stock closed on its intra-day high of $62 Monday, a 23% gain! MXIM struggled a bit on Tuesday, but managed to close the day with a small gain on average volume as investors consolidated the huge Monday move. Maxim is expected to announce earnings on 4/25 after the bell and we are hoping for a split announcement to come out with the earnings release. The Company currently enough shares for a 3:2 split so the announcement could come at any time. Until then, the stock has support just above Tuesday's low at $59 with technical support at the 100-dma, now at $55. Place stops under $55 to protect profits. Resistance is now up to $65 and then $70. Start new plays on a bounce up from support or a move above $65 on heavy volume. Confirm market sentiment and sector direction before opening new positions. Plan to exit in front of earnings on 4/25.


Picked on April 16th @ $50.31
Change since picked +11.88



ORCL - Oracle Corporation $78.94 +4.13 (+15.44)

As the baby-boom generation progresses into retirement, Oracle is finding new ways to assist healthcare organizations to control costs and streamline processes. On Monday, Metamoney's Web 100 showed that nine of the top ten healthcare companies on the web have chosen ORCL products for their care management needs. Though healthcare is just one of many Oracle Internet applications, the news may help fuel a strong recovery from our $60 support level. This advance, which was accompanied by great volume (57.6m), helped to push prices above today's 50-dma ($74.18) resistance level. With a break through the $80 resistance mark, bolstered by both the 20 and 30-dma's ($79.71 and $79.93), further resistance will likely come at the 52-week high of $90. Initially, we'll expect to find support along the 50-dma (previously resistance), and again at $60. If good daily volume (40.0m or better) can remain intact, look for potential entries as prices advance through resistance or give hard bounces off support. Also, continue to look at market strength as confirmation, prior to opening new positions. We'll hold positions through the shareholders meeting of 5/10, unless stopped out. Protect your profits with trailing stops, based upon your entry point and nearby support levels.


Picked on April 16th@ $63.52
Change since picked +15.42



SDLI - SDL Incorporated $160.50 +3.13 (+17.50)

On Sunday, we received the news we had been waiting for. In this week's edition of Barrons, several fund managers told the magazine that SDLI is poised to rise this week with expectations of higher earnings. The news announcement couldn't have come at a better time for SDLI shares, which also managed to take part in robust a market rebound. Under these positive conditions and with the short trigger to earnings, the stock has already realized a 35.5 point from Monday's open. Strong volume has also been present this week and indicates a good sign that momentum is picking up ahead of Wednesday's earnings. With continued momentum to the upside, look to take profits in front of the $180 resistance level, sustained by the 20-dma ($179.62). Still higher up, look for swift resistance at the 50-dma ($187.15) to present a more aggressive exit level. Remember not to hesitate taking profits, as prices may reverse quickly from these levels. The earnings report is due out after the bell on Wednesday, so look to exit positions by the close.


Picked on April 13th @ $152.25
Change since picked +8.25



TFS - Three-Five Systems $83.06 +9.06 (+16.56)

Evidently we were not the only ones who recognized the incredible relative strength exhibited by this LCD manufacturer last week. When you are trying to trade for a bounce in the market sometimes you are best served by picking those stocks that bucked the trend and held up in the face of selling. We have since been rewarded with a spectacular rally and we now own a stock that made a new high; there are not too many tech stocks that did that today. Monday's sharp selloff gave us an excellent entry point of just over $66 a share. The subsequent rally confirmed that we were on the right side of this trade. The new high today of $83 was just icing on the cake. The possibility of the stock gapping up and making another new high tomorrow is very good because the stock was very strong going into the close. We must advise a bit of caution though. Over the past three weeks we have seen the failure of several outstanding rallies and the winds of change blow fast in this market. Protect yourself. Do not let this winner turn into a loser. At the very least put a stop in just below today's low of $75.25. The last time TFS made a new high it dropped precipitously the following day, so be careful. We will exit this play if a split is announced at the 4/27 shareholders meeting.


Picked on April 16th @ $66.50
Change since picked +16.56



VRSN - Verisign, Inc. $139.50 +28.75 (+41.70)

Now that's more like it! Verisign, Inc. has been in rally mode this week along with a lot of others. If you were one of the brave souls who took a position in VRSN, you should be quite happy by now. Tomorrow this internet-based trust service company is scheduled to announce earnings after the bell. The consensus estimate is for a profit of .02 cents and the whisper number is .03 cents. Exit this play before the close to avoid any possible selling that may occur. The gain you are seeing now is the pre- earnings run. The risk of a post-earnings drop is high. The volume has been good both Monday and today, above average at 6 million shares. Demand for Verisign's services continued today with the company penning two new deals to provide their trust services to webMethods and SAIC ANXeBusiness. Today the stock opened at its 200-dma at $114.00 and remained strong all day. The combined boost for the NASDAQ and the upsurge in the NDX (NASDAQ- 100) helps too. Often we suggest that confirmation in the lesser and greater indexes should be confirmed; today was a good example of just such a confirmation. Currently, resistance can be found just overhead at $150.00 and then at the 100-dma at $175.00. Support now exists back at $110.00, just below the 200-dma. We will reevaluate this play after earnings and will advise you accordingly. Plan an exit by the close Wednesday.


Picked on April 13th @ $114.69
Profit/Loss +24.81



VSTR - Voicestream Wireless $98.81 +3.94 (+8.81)

Not a bad bounce for Voicestream. It seems that the stock's call for help has been answered. We have seen the most incredible market comeback in history over the past two days and VSTR was certainly part of it. Wireless Communications companies are here to stay and the leaders of this group are poised to continue coming back. If this comeback keeps rolling, investors will continue to focus on those companies with the best prospects for earnings growth. With wireless subscription rates exploding and exciting new products on the horizon, VSTR certainly fits the bill. VSTR got a little help in its marketing efforts today when it was announced that BUYPHONE.com will start a nationwide marketing and distribution campaign for VSTR's wireless services. You can not have too much Internet exposure. We got a fantastic entry on VSTR Monday as the quick selloff took the stock right to support just above $80. The spike rally off of this support took the stock straight through the 200-DMA at $91.75 and the stock settled below $100. VSTR was able to climb the $100 hurdle only very briefly today before falling back under that critical price point. OBV recovered nicely over the past two days and the MACD is still negative but is turning up. Patient investors still may want to wait for the stock to close above $100 before initiating a position. The rally back has been fast and furious. This market could rollover in a heartbeat. The single best piece of advice when you have a quick gain in a very volatile market is to ensure that your profit does not turn into a loss. We recommend that you set your stops accordingly. Today's low should provide support at $93 and we would not let it drop much below that price. We will exit this play after a split announcement or before the early May earnings report, whichever comes first.


Picked on April 16th @ $90.00
Change since picked +8.81


SPLIT RUN PLAY DROPS

TERN - Terayon Communication Systems $75.43 -6.44 (-18.56)

To list this as a play drop is a misnomer. On Sunday we initiated coverage of TERN with two warnings. The second of which indicated "not to go near", this stock if it opened Monday below $86.00. Well, the news of the class action lawsuit did not sit well with traders and it opened at $80.00. So, to say that this was even a play would be inaccurate if you followed our warning regarding the opening price. We will watch for developing opportunities with TERN and may initiate a play at a later date.




SPLIT CANDIDATE PLAY DROPS

ENE - Enron $68.00 +1.25 (-1.75)

We never got any confirmation from this play. We were looking for market strength to open this position but it never really showed up. The stock opened lower on Monday and fell below our stops by midday. Despite the bounce on ENE, we are still dropping this play because it traded down while the broader markets rallied which is not good. This play is on the defensive side so investors may continue to rotate out of ENE and the utility sector in order to buy technology stocks. If you have open positions in ENE, set tight stops at $67 and look for an exit on Wednesday.


Picked on April 13th @ $73.81 

Profit/Loss = -9.31 (-13%)
Best Profit = -1.75 (-2%)



INKT - Inktomi $116.00 +24.00 (+15.19)

Sometimes earnings plays work out and our recent move on INKT certainly paid some nice dividends for us. Although Monday's opening price was below anticipated support of $95, the strong rally that followed was very rewarding. The volatility continued as the stock could not make up its mind as to which side of $100 it wanted to stay on. If you held the stock and then sold it right before the close you should have a healthy profit in this play. It's official; INKT is now a profitable company. INKT reported quarterly earnings of one penny, ahead of expectations of a loss of 2 pennies. Although the stock is rallying a bit in after hours we can be comforted in knowing that we traded our disciplined plan.


Picked on April 13th @ $110.56

Profit/Loss = +5.44 (+5%)
Best Profit = +9.32 (+8%)

*Original recommendation was to buy the stock at $100.00.


 


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