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Email Version, Section 1, Monday 03/26/01
The SplitTrader.com Newsletter           Monday 03/26/2001  1 of 1
Copyright 2001, 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

To view this email newsletter in HTML format with imbedded
charts and graphs, click here:
http://www.splittrader.com/htmlemail/032601_1.asp
===============================================================

In This Newsletter:
===================
Market Commentary - The NYSE Bargain Barn
Definition of the Day
Monday's Split Announcements - None
Tuesday's Expirations
Tuesday's Play-of-the-Day - PFGC
================================================================

Market Commentary
=================


The NYSE Bargain Barn

The sideline cash jumped to the floor of the NYSE today lending further
credence to the theory that the triple symbol stocks may have put in a
significant bottom last week.  Retailers were particularly strong as
Wal-Mart (NYSE:WMT) picked up $2.03 to $49.60 while fellow Dow component
Home Depot (NYSE:HD) gained $1.68 to $41.35.

Speaking of the Dow, many other solid performances could be found within
the Dow Jones Industrials (INDU), which finished the day up 182.75
points and closed at 9687.53. INDU cyclicals also did well, as the value
theme dominated the Street.  Boeing (NYSE:BA) gained $2.44 to $55.44 and
International Paper (NYSE:IP) rallied $1.59 to $35.65.

Unfortunately, the rally did not extend to the NASDAQ (COMPX), which
fell a modest 10.19 to 1918.49.  A potential rally of the technology
sector was thwarted by more bad news from Cisco Systems (NASDAQ:CSCO)
and broad weakness among semiconductors. Cisco's CEO, John Chambers,
offered a chilly forecast for the entire economy during an interview
with the Financial Times.  It is his belief that the economic outlook
has continued to deteriorate since Cisco last warned back in January.
He further stated that the current slump may continue for "at least
another three quarters."  Cisco shares dropped another $0.81 and closed
at a new 52-week low of $17.88.

The PHLX Semiconductor Index (SOX) slumped 23.65 points and closed at
618.45, thus ending what had been a nice bounce from last week's low of
537.35.  The culprit was networking chip manufacturer PMC-Sierra
(NASDAQ:PMCS), which offered the latest earnings warning.  Citing waning
demand and canceled orders, PMCS said it now expects first quarter
earnings to be 2 to 3 cents.  Previous expectations were calling for
profits of 12 cents.  The Company also said that it plans to cut
approximately 230 jobs.  PMCS dropped $1.68 to $32.26.

Another chip maker, Conexant Systems (NASDAQ:CNXT) offered its negative
news to also hurt the sector.  CNXT warned that it now sees a loss of 35
to 40 cents for the second quarter.  Estimates had been looking for a
loss of 24 cents.  CNXT dropped $0.63 and closed at $10.50.

We are quite proud to report that the Big Board rally extended to the
Splittrader.com Play List.  All seven of our current plays posted gains
today.  Topping our list was THQ Inc. (NASDAQ:THQI), which soared to a
new high of $36.88 and was up $2.38.  Smithfield Foods (NYSE:SFD) also
established a new high with a close of $36.40 with a gain of $1.63.

Our Play of the Day for Tuesday, Performance Food Group (NASDAQ:PFGC),
offered us an excellent entry price of $48.75 and proceeded to trend
higher the rest of the day, finishing up $1.13 and closing at $50.63.

The major market indices were generally higher for the day.  The S&P 500
(SPX) gained 12.85 to 1152.70.  The S&P 100 (OEX) picked up 7.74 to
588.46.  Small cap stocks, represented by the Russell 2000 (RUT),
rallied 4.11 to 447.38.

Outside of the previously mentioned chip sector, other widely watched
groups were generally higher.  The PHLX Bank Index (BKX) rallied 15.69
to 822.99.  The Dow Jones Utility Index (UTIL) picked up a whopping
15.94 to 367.42 following approved rate increases in California.  The
Biotechnology Index (BTK) enjoyed a nice bounce with a gain of 15.13 to
459.64.

A takeover of drug company Alza (NYSE:AZA) by Johnson & Johnson
(NYSE:JNJ) was rumored all day and was finally confirmed after the
close.  AZA finished the regular session up $8.70 to $38.75 while JNJ
dropped $2.83 to $85.38.  Although the takeover is considered to be an
important strategic acquisition for JNJ due to the expanded product line
it should offer the pharmaceutical giant, perhaps the perception is that
JNJ is paying too much.  JNJ is dropping another point in after hours
trading while AZA remains unchanged.

In other after hours news, Manugistics (NASDAQ:MANU) is rallying
following an earnings release that met analysts estimates of 5 cents of
profits for the quarter.  The Company stated that it continues to see
excellent demand for its products.  The positive news could spark a
rally among B2B stocks tomorrow.  MANU closed the regular session at
$26.00, which was down $0.88 for the day.  However, MANU appears to be
recouping much of that loss in after hours trading.

There is some more bad news for the semiconductor stocks during the
after hours session.  TranSwitch (NASDAQ:TXCC) is now the latest member
of this group to guide quarterly estimates lower.  Order cancellations
and order push-outs should cause TXCC to report first quarter profits of
9 to 10 cents.  Previous estimates were looking for profits of 16 cents.
TXCC closed the regular session at $18.88, which was down $0.69.
Current after hours trading is showing more declines with the stock
trading just below $17.00.

Solid buying on Wall Street caused a slump in Chicago, as bond prices
dropped.  The 10-year Treasury note slipped 12/32 to a yield of 4.86
percent.  The 30-year government bond fell 28/32 to 5.365 percent.

Tomorrow's early action could easily be an extension of today.
Semiconductor's may be weak, which should hold back the technology
stocks while money flows into the relative safety of cyclical, retail
and other stocks that exhibit reasonable growth at a reasonable price.

There are a couple of economic reports slated for tomorrow that should
receive a fair amount of attention.  Durable Orders are expected to show
a 0.5% increase for February.  If this number comes in worse than
expected it should put more pressure on the Fed to continue easing.
Following this report will be the release of the Consumer Confidence
numbers after the first half hour of trading.  This number will be
closely watched to see if people intend to put off purchases due to
fears of a slowing economy.

A third up day for the Dow would put some decided pressure on the bears.
Although bear markets are typically characterized by quick bounce
rallies following the establishment of new lows, it will be important to
see if we can get some panic short covering.  If the rally fails, it
will probably be due to people taking the opportunity to unload
positions that they wish they had dumped a couple of weeks ago.

As I have stated in this column before, do not be afraid to be quick
with your stops and take profits if you were fortunate enough to get
long near last week's lows.  Cash is still king in this market.

Technically speaking, the Dow did establish some very important support
at last week's spike low of 9047.  The Dow continues to love trading
around easily recognizable numbers.  Today's peak approached 9725.  If
we can close above 9750 tomorrow with good NYSE volume decidedly over 1
billion shares, we may see a nice retracement all the way back to 10,000
by the end of the week.  The last time this average rallied from an
extremely oversold condition indicated by the RSI was in October.  The
subsequent rally lasted 10 days and was good for approximately 1500
points before a period of consolidation.

The NASDAQ (COMPX) is at a critical juncture and the key will be how the
1ndex handles continued bad news.  Although the Index has staged a nice
rally off its extremely oversold condition according to the RSI, it
remains to be seen if investors see any real value among languishing
technology stocks.  We could easily see the NASDAQ go through a lengthy
consolidation between 1750 and 2000 as investors continue to wean
themselves from their technology stock addictions.  On the plus side,
the MACD did just turn positive. The MACD has been a powerful indicator.
In the past, this event has led to a nice rally.  It remains to be seen
if the NASDAQ can shake off the bad news, close above 2000 and gradually
move to a test of 2250.

Good Luck!  And may all of your trades be winning ones!

Jim Booth
Research Analyst


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Definition of the Day
=====================

Bearish Spread
A bearish spread is a strategy used in the options market to take
advantage of a fall in the price of the underlying security.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=30


============================
Monday's Split Announcements
============================

None


=====================================
Tuesday's Expirations by Payable Date
=====================================

Trading Split-Adjusted on March 28:

None


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=============================
Play of the Day (For Tuesday)
Monday, March 26, 2001
=============================

PFGC - Performance Food Group $50.63 +1.13

Sunday's Comment:

PFGC, a major supplier of food products to restaurants, hotels,
schools and hospitals could be on the verge of another price
breakout. For most of this year, PFGC has seen quick spikes in its
price following a period of consolidation around its 50-DMA.
Currently, this moving average is slightly below $48.00 and PFGC
has been consolidating right around this price for two weeks. By
closing right on its high for the week on Friday, PFGC may be
ready for another spike up this week. New positions could be
considered if PFGC opens higher on Monday. If you see a gap up,
you may want to wait for a little pullback in the first few hours
of trading before jumping on board. In addition to PFGC's strong
chart, we believe that the stock is a split candidate, now that
the stock has climbed back above $45.00. A move higher this week
would likely be confirmed by a MACD that turns positive. Money
Flow is also quite strong. A quick advance would have plenty of
upside potential before the RSI issues an overbought signal.

Monday's Update:

Since reporting outstanding quarterly results in early February,
Performance's stock has run up and then run back down.  In fact,
over the past three months, the stock has put in three different
bottoms from which it has been able to rally.  We expect PFGC to
make another run from its most recent bottom at $46.50.  With that
said, at its current price of $50.63, PFGC appears to have support
at its 40-dma of $48.50.  As for resistance, there doesn't appear
to be any until the upper Bollinger Band located $53.69.  Once
this level is breached, however, a challenge of the all-time high
of $56.75 could be in order thanks to a MACD that turned positive
today and strong Money Flow.  Traders considering a position in
PFGC should look for strong volume, 50,000 shares or more traded
by noon EST, on a move through yesterday's intra-day high of
$51.00 before placing their trades.

Picked on March 25th @ $49.50
Change since picked +1.13
Stop Loss @ $46.00


 


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