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Email Version, Section 1, Wednesday 04/04/2001
The SplitTrader.com Newsletter        Wednesday 04/04/2001 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
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http://www.splittrader.com/htmlemail/040401_1.asp
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In This Newsletter:
===================

Market Commentary | Stocks Go On A Wild Ride
Definition of the Day
Wednesday's Split Announcements | None
Thursday's Expirations
Thursday's Play-of-the-Day | KMB

================================================================


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

Stocks Go On A Wild Ride

Few, though, took a wilder ride than Lucent Technologies
(NYSE:LU).  The beleaguered and blooded telecom equipment
provider was besieged by rumors (supposedly started in Europe)
that it was facing bankruptcy.  Let's face it, bankruptcy is
generally perceived, and rightfully so, as an economic negative
by the investing public, so it should come as no surprise that
Lucent was thoroughly routed today.

In fact, during one point in the session, the telecom giant was
down 30 percent, fetching a paltry $5.50 a share.  But soon after
hitting its nadir, the company started releasing press releases
saying it just ain't so, and its stock eventually recovered to
trade over $7.00.  Unfortunately for Lucent, though, sellers once
again took control and the company's shares sold-off through the
afternoon hours, forcing it down to an eventual close of $6.78.

Of course, as many long-term Lucent shareholders know, a double-
digit sell-off isn't out of the ordinary.  In fact, there have
been so many over the past 28 months that the company has seen
more than $230 of its market value vanish.  Adding insult to
injury, Lucent's stock is now trading below its 1996 IPO offering
price after having once tipped the beams at $84 a share.

Speaking of IPOs, another company trading below its IPO price is
Lucent progeny Agere Systems (NYSE:AGRa).  The optical component
maker's shares fell $0.17 to $4.77, meaning its stock is down 21
percent since its IPO of 600 million shares at $6 each last week.

Still, if it weren't for Agere, Lucent would be in deeper you-
know-what than it already is because through Agere Lucent was
able to secure $4 billion in credit lines and receive $2.5
billion from the Agere IPO, all of which have helped to make
Lucent's whopping $8.1 billion debt load more manageable.

Lucent & Co.'s woes weighted heavily on the market through the
first hour of trading, as did Tuesday's flurry of high-tech
earnings warnings.  Rational Software (Nasdaq:RATL), Kana
Communications (Nasdaq:KANA), Clarus (Nasdaq:CLRS) and Sybase
(Nasdaq:SYBS) all warned late yesterday that there latest round
of quarterly earnings were going to be nothing to celebrate.

Within the first hour of trading it appeared as if all the major
market indices were going down for the count again.  However,
spirits were briefly lifted while Federal Reserve Chairman Alan
Greenspan gave the U.S. Senate a discourse on the benefits of
free trade.  Market participants were obviously bidding up shares
in the faint hope the Fed Chairman would let slip his goal for
short-term interests.   But once it became clear that Mr. G
wasn't going to commit such an egregious faux pas, traders went
back to doing what they do best -- sell.

And as we are all well-aware, the favorite market to sell is the
Nasdaq.  To that end, the Nasdaq Composite Index (COMPX) lost
34.20 points, or 2.04 percent, to 1,638.80, suffering its third
straight losing session and hitting its lowest close since mid-
October 1998. Eighteen of the 25 most heavily traded stocks in
the COMPX touched new 52-week lows as wary investors took even
more money off the table ahead of the first-quarter reporting
season.

The selling was particularly brisk in the COMPX's semiconductor
components.  Intel (Nasdaq:INTC) lost $2.38 to $22.63, hitting
its lowest close since late October 1998.  Meanwhile, Applied
Micro Circuits (Nasdaq:AMCC) dumped $1.25 to $11.31 and Applied
Materials (AMAT) jettisoned $2.31 to $37.81.  All told, this
week's pounding in the chip sector has caused the PHLX
Semiconductor Index (SOX) to shed nearly 14 percent of its value,
putting the oft-watched index at levels not seen mid-1999.

Many traders are looking for the chips to lead the tech issues
out of their doldrums, as these stocks are considered the
cyclicals of the high-tech world.  Obviously, based on recent
performance, the chips are not portending a tech recovery anytime
soon.

Fortunately, traders seeking sanctuary today could find it in the
Old Economy.  The Dow Jones Industrial Average (INDU) gained
29.71 points, or 0.31 percent, to 9,515.42.  However, the ride
was far from smooth.  Early in the session the blue-chip
barometer dipped below the 9,378.38 level, putting the average in
bear territory.  The INDU then jumped more than 1 percent, as
some trader began foraging for bargains produced after Tuesday's
sharp sell-off.

Ironically, most of these bargains were found in the INDU's
cyclicals.  Caterpillar (NYSE:CAT), General Motors (NYSE:GM),
DuPont (NYSE:DD) and International Paper (NYSE:IP) all
experienced robust gains.

Cyclicals fortunes tend to rise and fall with the economy, which
may seem counterintuitive since the economy has been dropping
like a stone while the cyclicals have been inching higher.
Keep in mind, though, that the market is a forward-looking
mechanism, so its natural that the cyclicals (I'm referring to
real cyclicals not the chip cyclicals I mentioned earlier) should
rise ahead of the overall market recovery.  The cyclicals have
done a decent job of holding their value while the rest of the
market has been selling off over the past few months.
I think if the cyclicals can continue to avoid a grinding sell-
off, the broader markets could soon find a bottom.

To that end, it's important that the Morgan Stanley Cyclical
Index (CYX) maintain support near its 60 percent retracement from
its March 2001 high to its October 2000 low.  Should this support
level breakdown, however, it's possible that the cyclicals could
start circling the drain with the rest of the market, which, in
turn, could mean more traders will head for the sideline.

Chart of Morgan Stanley Cyclical Index:



Shifting to the broader market, the S&P 500 (SPX) continued its
slide, closing down 3.21 points, or 0.29 percent, to 1,103.25,
its lowest close of the past 29 months.  Nevertheless, traders in
this venerated index's issues can take some comfort.  Goldman
Sachs stock market strategist Abby Joseph Cohen was quoted by
Reuters as saying she still believes stocks are undervalued as
measured by the SPX's basket of stocks.

In Splittrader news, our Current Play list continues to weather
the selling storm admirably.  Universal Healthcare (NYSE:UHS),
Kimberly-Clark (NYSE:KMB), McCormick & Co. (NYSE:MKC) and
Equitable Resources (NYSE:EQT) all finished the day with strong
gains.  Moreover, our entire portfolio is up this week while most
of the major market indices are down.

On the economic front, the NAPM Non-manufacturing business
activity declined in March to 50.3 percent from last month's
reading of 51.7 percent.  This figure is below the consensus
estimate of 51.5 percent and indicates weaker than expected
growth in the non-manufacturing sector, which is cause for some
concern.

Another cause for concern is the never-ending slide in the COMPX.
As it now stands, the tech-heavy index doesn't have any immediate
support until its October 1998 lows of 1,400, which is a 15
percent discount from current price levels.  In other words, the
worst may not be over.

Still, we can take some solace that the INDU has been able to
withstand the siren call of the bear market, even if it has been
trading sideways for the past two-years.

With that said, I still believe that the safest way to play this
market is through conservative issues that are maintaining an
uptrend (which is why you'll find mostly three-letter issues on
our Current Play list).  At this point, I'm not sure that its
safe to play the market short anymore.  Too many issues have
fallen to levels that I think no longer justify the risk to gain
the expected reward.

So, we are going to keep doing what we've been for the past six
months, and that's keep the play picking conservative and the
stop-losses tight.

S.P. Brown
Editor
www.Splittrader.com


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

Ascending Triangle

By connecting the price tops of a particular stock or index over a
specified time period, a horizontal line is formed.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=13


===============================
Wednesday's Split Announcements
===============================

None


======================================
Thursday's Expirations by Payable Date
======================================

None


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=====================
SplitTrader.com Plays
=====================

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 week)
Picked at date and Change since picked

Terms:
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.
==================================================================


Thursday's Play-of-the-Day
==========================

Wednesday, April 4, 2001
=============================

KMB - Kimberly Clark Corp. $68.85 +1.00 (-0.98)

Tuesday's Comment:

KMB may not be the most exciting company in the universe;
nevertheless, its stock continues to attract investment due to
its stability. Although this play has pulled back so far this
week due to general market uneasiness, KMB could make a move
tomorrow following some potentially positive developments after
the close. KMB's Executive Vice President, Kathi Seifert, is
speaking at the Banc of America Securities Consumer Products
Conference Tuesday afternoon. She will be outlining KMB's
strategic initiatives and provide an overview of the company.
These types of presentations are usually pretty positive because
they are designed to encourage investment in the company by the
conference attendees. Technically speaking, KMB saw its third
mild down spike of the past two weeks today. The previous two
spikes were one day events and the stock quickly recovered and
moved right back to its 50-DMA. This moving average closed today
at $67.97. We would be cautious about adding positions if this
pattern does not repeat itself and KMB drops below $65.28.
Otherwise, traders could consider adding to positions if KMB
opens flat to a little higher (no more than two points).

Wednesday's Update:

While KMB continues to base around the $67 level, it successfully
tested the $65 level today and moved higher.  This is important
as it gives investors in the stock more confidence to hold
through rocky times such as we have been seeing all week.  As
noted yesterday, we are also anticipating some encouraging words
out of KMB's Vice President, Kathi Seifert, at the company's
presentation tonight at the Bank of America Consumer Products
Conference in New York.  She is set to present an overview of the
company's strategies going forward into next year.  Looking at
the chart, we note that resistance has come in at the 50-dma, now
located at $68 and support can be found at $65.  Any moves higher
over the next few days will likely trigger a bullish crossover in
the MACD.  New positions could be considered if the stock breaks
through the 50-dma at $68 on volume that puts the stock on track
to do 2 million shares by days end.  Our stops remain at $62.50
to keep losses in check should KMB reverse course.

Picked on April 1st @ $67.83
Change since picked -0.98
Stop Loss $62.50

 


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