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Email Version, Section 2, Sunday 04/08/2001
The SplitTrader.com Newsletter         Sunday 04/08/2001 1 of 2
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/040801_1.asp
==================================================================

In This Newsletter:
===================

Market Stats
Market Commentary - Back To Square One
Definition of the Day
Friday's Split Announcements - None
Monday's Expirations
Event Calendar - Next Week's Economic reports
Upcoming Splits for next two weeks
Successful Announcements - Last Week
New Candidates List
Expected/Likely Announcements for the Coming Week

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


Market Stats For the Week
=========================

Index                     Close    Change    Support   Resistance

DJIA (INDU)            9,791.09   - 87.69      9,100       10,000
Nasdaq (COMPX)         1,720.37   -119.88      1,500        2,250
S&P 500 (SPX)          1,128.41   - 31.92      1,080        1,375
Russell 2000 (RUT)       434.66   - 15.87        410          460
PHLX Semi (SOX)          487.53   - 57.51        450          650



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

Back To Square One

The streak ends at two; that is, if you can call it a streak at
all.

Over the past two weekends, I've been keen to mention in my
scribblings how the three major market barometers closed Friday's
trading session in the black.  In doing so, my intention was to
offer traders longing to go long this long market a little hope
and some sage advice.

Well, so much for good intentions. As we all came to learn 4:00
PM EDT, the three major indices once again reverted to form and
closed yet another Friday in the red.

Not that it was a necessarily a forgone conclusion they would do
so, because it wasn't.  If you'll think back to Thursday, traders
were thoroughly (if only fleetingly) inspired by a new-fangled PC
box maker and an old-fangled industrial cyclical.  Both Dell
Computer (Nasdaq:DELL) and Alcoa (NYSE:AA) stepped to the fore
that day to declare they would meet the Street's muted quarterly-
earnings expectations.  In response, traders bid up a major
average 400 hundred points and a major index 100 points.

Unfortunately, though, this market takes to momentum like a cat
takes to water, so, not surprisingly, much of Thursday's gains
were returned on Friday.

But to be fair, traders had plenty of reasons to sell, as the
market was swamped by a torrent of bad news.  Agilent
Technologies (NYSE:A) and Tellabs Inc. (Nasdaq:TLAB), along with
a few others, reported that quarterly results would likely
disappoint.  And if that weren't depressing enough, Pacific Gas &
Electric (NYSE:PCG) announced it would file for bankruptcy.

Friday's employment report only aggravated the market's dour
mood. The government reported the number of payroll jobs in the
economy fell by a startling 86,000 instead of rising by the
50,000 that many economists had expected. This marked the largest
drop in jobs since November 1991, which, coincidentally, occurred
during the last recession.  Meanwhile, the unemployment rate
increased to 4.3 percent from 4.2 percent in February, which
matched economists' expectations.

Taken in the aggregate, Friday's slate of bad news was enough to
turn even the staunchest bull into a bear.

Of course, as most of us are aware, bearish sentiment is most
readily manifest on the New Economy exchange, that, ladies and
gentlemen, being represented by the Nasdaq Composite Index
(COMPX).  The tech-heavy index was routed on Friday for 64.64
points, or 3.62 percent, to 1,720.36.  The COMPX had little
chance of finishing the day in the black, having gapped down 30
points at the open to trade in the 1,725 to 1,725 range for most
of the day until it moved down a notch in the final hour of the
session to trade between 1,700 and 1,725.

Much of the selling pressure could be attributed to the COMPX's
three largest components:  Microsoft (Nasdaq:MSFT), Intel
(Nasdaq:INTC) and Cisco Systems (Nasdaq:CSCO).  The Triplets, as
they are affectionately referred to around the Splittrader salt
mines, finished the day deep in the red, with Cisco finishing the
deepest thanks in large part to Tellabs earnings warnings, which,
by the way, did a number on the networking sector, as the AMEX
Networking Index (NWX) lost 7.4 percent of its value.

Also contributing to the networking sectors lost cause was
Sycamore Networks (Nasdaq:SCMR), which sank $1.81 to $7.25 after
warning late Thursday it will report a fiscal third-quarter loss
-- as opposed to the profit analysts expected.  The company also
announced it plans to lay off 13 percent of its work force and
take a restructuring charge of $140 million-to-$150 million.
Other network equipment makers that fell on Sycamore's news
included Juniper Networks (Nasdaq:JNPR), Ciena Corp.
(Nasdaq:CIEN) and JDS Uniphase (Nasdaq:JDSU).

If you think it's been difficult to make money in networking
stocks this year, you haven't been imagining things.  After
reaching a high of 868 on January 19th, the NWX has moved only
one way, and that's down.  In fact, over the past three months,
the NWX has lost 59 percent of its value, which isn't surprising
considered every networking-related issue mention in this piece,
sans Tellabs, is trading at an 80 percent discount or more to its
52-week high.  And as for Tellabs, it's trading at a 57 percent
discount.

The fall in the networking sector goes a long way to explaining
the COMPX's woes, since most of these issues trade on the Nasdaq
exchange.  Year-to-date, the COMPX is down 40 percent.  Still, I
think the worst for many high-tech issues is behind us.  Over the
past few weeks, I've been boring readers with the same graph of
the COMPX, which I will do again today. (I'm only doing so
because I think it's an important graph, not because I'm a
sadist).  If you'll notice, the COMPX has been able to trade
above its intermediate down trend started in early February.  I
think this is an important development.  I interpret it as
meaning selling pressure is abating. In fact, for most of the
recent sell-off, volume has been dropping, which means selling
pressure could be abating.

All in all, I think these recent developments bode well for the
COMPX, particularly if it can break through resistance at 1,800.

Chart of the NASDAQ Composite:



Unfortunately, I don't have the same warm fuzzy feeling for the
Old Economy despite its ability to weather the selling storm
better than the New Economy.  Case in point, while the COMPX
experienced a 3.62 percent loss on Friday, the Dow Jones
Industrial Average (INDU) experienced a 1.28 percent lost, as it
closed down 126.96 points to 9,791.09.

Still, I don't like the idea that the Old Economy issues have yet
to take their lumps.  The INDU is not considered to be in a bear
market (a close of 9,378 or lower).  I think it's important that
the INDU spend a little time in purgatory before it attempts a
sustainable rally.

To that end, the INDU is looking weak, at least according to the
charts.  Since obliterating its diamond formation last month, the
INDU has confirmed a longer-term down trend began back in January
2000.  At this point, I would not be surprised to see the INDU
test support at its lower regression line near 9,150.  In fact, I
think it would be healthy.  I think once the INDU closes below
9,378 we will finally see the full capitulation that this market
is so longing for.

Chart of the Dow Jones Industrial Average:



As for the broader market barometer, the S&P 500 Index (SPX),
like the COMPX, confirmed its bear market status on Friday,
closing down 22.97 points, or 1.99 percent, to 1,128.47.  And in
case you're wondering, Abbey Joseph Cohen has finally lowered her
year-end target on the SPX from 1,650, though she hasn't given an
exact replacement figure.

In stock news, earnings concerns continued to be the main byline.
Cell-phone chipmaker Motorola (NYSE:MOT) got whacked for $3.45 to
close at $11.50 after a Credit Suisse First Boston analyst said
the company probably won't meet analyst profit expectations for
the year.  Fueling the selling flames was a Bloomberg News
columnist, who suggested the company might face a financial
crisis due to an inability to refinance short-term debt should
its debt rating be cut.  The company denied the Bloomberg
assertion and said it is "financially sound."

Doing Motorola one better was electronics retailer RadioShack
Corp. (NYSE:RSH), which lost $10.20, or 26 percent, to $28.30
after reporting first-quarter earnings will fall to $0.31 to
$0.33.  The company was expected to earn $0.38, according to a
survey of analysts by First Call.

Another notable loser was our former Current Play list member
MBIA (NYSE:MBI), which tanked $7.69 to $75.10.  This stock had
been a strong performer for us until the Pacific Gas & Electric
debacle hit the wires.  MBIA has direct net par exposure to PG&E
of approximately $590 million of which about 61 percent is
secured by first mortgage bonds with the remainder being senior
unsecured bonds.

The beneficiary of the equity market's foibles on Friday was the
Treasury market.  The 10-year Treasury note climbed 28/32 to
yield 4.865 percent while the 30-year government bond jumped 1
5/32 to yield 5.45 percent.  Overall, the yield curve has grown
increasingly steep over the past few months, as spreads between
short- and long-term bonds have widened to levels not seen since
1996. Historically, a positively slopped yield curved has boded
well for the equity markets.  Roughly speaking, when the yield
curve gets steeper (as the gap between short and long rates
widens), monetary policy is stimulating the economy and growth
will likely increase.  The steep yield curve of 1994 preceded the
economic boom that continued through mid-2000.

On the economic front, there was little worth noting on Friday
aside from the unemployment report (if that wasn't enough).  This
week, the major economic data releases won't be released until
late in the week.  Retail sales, the Producer Price Index (PPI),
and, core PPI are due on Thursday.  Retail sales are forecasted
to post flat for March, up from a 0.2 percent decline in
February.  PPI is expected to have risen 0.1 percent in March,
unchanged from the prior month's posting.  Less food and energy
sectors, core PPI is expected to have also increased 0.1 percent,
up from a 0.3 percent decline in February.

On Friday business inventories and University of Michigan
Confidence will be released.  Business inventories are predicted
to have gained 0.3 percent in February, off slightly from a 0.4
percent increase in January.  The Michigan Confidence, a closely
watched gauge of consumer sentiment, is forecasted to have
dropped (not surprisingly) to 90.5 in preliminary estimate for
this month, off from its final March index reading of 91.5.

With so little happening on the economic front early in the week,
look for earnings to once again set the market's mood. In fact,
earning season returns in full force this week as a slew of
companies report their fiscal first quarter earnings.  Companies
reporting during this week include Motorola, which will call in
its first-quarter results on Tuesday, and Yahoo (Nasdaq:YHOO),
whose earnings announcement will punctuate Wednesday's session.
Abbott Laboratories (NYSE:ABT), Biogen (Nasdaq:BGEN), Handspring
(Nasdaq:HAND), and Juniper Networks (Nasdaq:JNPR) will all report
their earnings on Thursday.

If you are going to trade this week, expected increased
volatility in the markets, particularly if the trend in corporate
earnings is much better or much worse than expected.  I suspect
it will be worse.  First Call has counted 808 announcements of
disappointing first-quarter results so far -- the highest total
for any quarter in the five years the firm has been tracking
them.

Still, there could be a silver lining surrounding the earnings
clouds.  Should companies fail to meet their lowered estimates or
issue further warnings about the rest of the year, the Federal
Reserve could be forced to lower rates before its scheduled May
16th FOMC meeting.  In fact, Merrill Lynch even went as far as to
issue a report Friday morning suggesting the weak employment data
could spur more aggressive, inter-meeting cuts by the Fed,
possibly cutting as much as 50 basis points this week.

So, if volatility is once again the norm, you might want to
head for the sidelines, as I doubt few stocks will build much
momentum this week.  On the other hand, if you are the more
adventurous type, you might consider straddling or strangling
(optionally speaking of course) a few high-volatility stocks.  I
know this strategy has worked well for a few of our readers over
the past month.

S.P. Brown
Editor
www.Splittrader.com


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

Hostile Takeover

A takeover that occurs against the wishes of the Board of
Directors and the management. If the acquiring company makes an
offer that shareholders feel is adequate, they may vote to
approve the takeover despite the wishes of the Board and
management. The acquiring company may raise the proposed offer to
change the target's sentiment toward the offer, thus changing the
hostile takeover to a friendly one.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=175



============================
Friday's Split Announcements
============================

None



====================================
Monday's Expirations by Payable Date
====================================

Jefferson-Pilot (JP) splits 3:2



==============
Event Calendar
==============

For the week of April 9th, 2001

Monday
======


Tuesday
=======
Richmond Fed Mfg. Survey  Mar  Forecast:    NA   Previous:   2.0


Wednesday
=========
Export Prices ex-ag.      Mar  Forecast:    NA   Previous: -0.10%
Import Prices ex-oil      Mar  Forecast:    NA   Previous: -0.10%
Oil & Gas Inventory     6-Apr  Forecast:    NA   Previous:303.2MB


Thursday
========
Initial Claims          7-Apr  Forecast:    NA   Previous:   383K
PPI                       Mar  Forecast:  0.10%  Previous:  0.10%
Core PPI                  Mar  Forecast:  0.10%  Previous: -0.30%
Retail Sales              Mar  Forecast:  0.00%  Previous: -0.20%
Retail Sales ex-auto      Mar  Forecast:  0.20%  Previous: -0.30%
Chain Store Sales         Mar  Forecast:    NA   Previous:   2.8%


Friday
======
Business Inventories      Feb  Forecast:  0.30%  Previous:  0.40%
Mich Sentiment-Prel.      Apr  Forecast:    91   Previous:  91.5
ECRI Wkly Leading Idx.  6-Apr  Forecast:    NA   Previous:  -5.4%


Week of April 16th
=================
Apr 17  CPI
Apr 17  Core CPI
Apr 17  Housing Starts
Apr 17  Building Permits
Apr 17  Industrial Production
Apr 17  Capacity Utilization
Apr 18  Trade Balance
Apr 18  Leading Indicators
Apr 19  Initial Claims
Apr 19  Philadelphia Fed
Apr 19  Treasury Budget


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===============
Upcoming Splits
===============

Symbol  Company Name                Splits  Payable    Executable

JP   - Jefferson Pilot                3:2  04/09/2001  04/10/2001
UCBH - UCBH Holdings                  2:1  04/10/2001  04/11/2001
GVA  - Granite Construction           3:2  04/13/2001  04/16/2001
SBL  - Symbol Technologies            3:2  04/16/2001  04/17/2001
CAH  - Cardinal Health                3:2  04/20/2001  04/23/2001
MBI  - MBIA Inc.                      3:2  04/20/2001  04/23/2001
SBUX - Starbucks Corp.                2:1  04/27/2001  04/30/2001



Successful Announcement Predictions For The Past Week
=====================================================

Symbol         Company              Date Announced
=====================================================

             No Split Announcements



================================
NEW SPLIT CANDIDATES LIST
================================

AVE - Aventis   $78.71 (+1.86)
This maker of specialty chemicals and pharmaceuticals for the
healthcare industry has never split its shares.  However, given
the fact that it is trading over $75/share, we feel it is time
for the ADR to announce a split.  It has unlimited shares
authorized, so a 2:1 may definitely be in the cards.  We will
keep our eyes and ears open for a BoD meeting towards the end of
next quarter.

 

===

SRDX - SurModics, Inc.  $42.56  (+6.56)
SRDX also is a chemical maker for the healthcare industry.  The
stock last split 2:1 back in December of 2000 at $49/share.  We
are now closing in on SRDX's historical split range and with 45
million shares authorized and only 16 million outstanding; SRDX
could definitely do a 2:1.  We will look towards SRDX's earnings
release date of 4/17 as the next likely time for a split
announcement.

 



==================================================
Expected/Likely Announcements for the Coming Week
==================================================

                                       Date Expected
Symbol         Company                 To Announce

STZ            Constellation Brands       04/12

----------------------------------------------------

STZ - Constellation Brands  $73.50 (+1.75)

Constellation Brands has been climbing to new highs over the past
month.  The stock has not split its shares since back in 1992
when it split 3:2 at around the $23 level.  With the stock
currently trading over $70/share, we feel a split is long
overdue.  We are therefore expecting a 2:1 split announcement to
coincide with Constellation's earnings release date of 4/12.

 


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