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Email Version, Section 1, Tuesday 05/08/2001
The SplitTrader.com Newsletter          Tuesday 05/08/2001 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/050801_1.asp
================================================================

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

Market Commentary - Waiting On Cisco
Definition of the Day
Tuesday's Split Announcements | None
Wednesday's Expirations
Plays - New - Updates - Drops
Wednesday's Play-of-the-Day - XTO

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


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

Waiting On Cisco

A number of analysts jumped the gun in the Cisco waiting game,
creating an air of confusion going into the networking giant's
earnings release.  While one stock does not make a whole market,
Cisco (NASDAQ:CSCO) probably comes the closest to being "the
stock" of the NASDAQ.  Thus, traders will be hanging on every
word that CEO John Chambers has to say about the economy and
about capital expenditures going forward into next year.

The pre-release flurry of upgrades and downgrades on CSCO was
kicked off by a Morgan Stanley 180-degree turnaround.  Morgan's
Chris Stix changed his mind and upgraded the networking stock
from "neutral" to "outperform" after saying just last week that
CSCO was "too rich for our blood".  Everybody is entitled to
change their minds, but the numbers don't magically inflate in
five days.  Needless to say, the stock broke higher on the
upgrade but settled back after investors turned neutral into
Chambers' conference call.

Other brokerage houses also chimed in ahead of Cisco's earnings,
but none were as positive (or silly) as the above-mentioned Stix
call.  Gruntal's Michael Perica cut his long-term rating on CSCO
from an "outperformer" to a "market perform".  Perica told
clients he doesn't see a turnaround anytime soon and that the
shares do not deserve a higher valuation.

As it turned out, Mr. Stix was more on the ball in upgrading CSCO
than Mr. Perica was in downgrading the networker.  CSCO ended up
beating Wall Street estimates of $0.02/share by coming in with
third quarter earnings of $0.03/share.  In addition, revenues
came in at $4.73 billion as opposed to estimates of $4.69
billion.  However, Mr. Chamber stated that, "We are now in a
valley much deeper than any of us anticipated."  And we shall see
what effect his conference call has on NASDAQ trading tomorrow.
CSCO closed up $1.13, or 5.87%, to $20.83 in today's session.

On the economic front, we received word of a slowdown in
productivity for the first quarter.  The 0.1% slump in
productivity was the worst reading in six years and missed
expectations of a 1.2% rise in productivity.  In addition, unit
labor costs ratcheted higher by 5.2%.  Both reports initially
brought out the boo-birds, but after further review, traders
shrugged off the numbers, considering that productivity is highly
cyclical and that inflation is the last of our worries.

Today's Markets

The markets pulled out the water wings today and treaded water
ahead of the Cisco report.  Trade, for the most part, was quiet
and range bound for the second day in a row.

The NASDAQ (COMPX) managed to pull out a 25.07-point gain to end
the session at 2198.64.  Volume came in at 1.9 billion shares (of
which CSCO did 134 million).  New highs, at 129, continue to beat
new lows, 24.

The DOW (INDU) pulled back today, due in large part due to the
finacials.  The DOW lost 51.66 to 10883.51 on the heels of a J.P.
Morgan (NYSE:JPM) and American Express (NYSE:AXP) downgrade.  JPM
lost $1.45 to $47.75 and AXP slipped $1.93 to $41.30.  Volume on
the big board came in on the light side, with 990 million shares
crossing the tape.

Of note is the fact that the S&P 500 is still bumping its head on
resistance at 1265.  Today was the seventh session that the S&P
was turned back from this level.  The more it tests and fails,
the greater the chance of a pullback, so lets all break out the
pom-poms for the S&P.

Stocks and Sectors on the Move

While the NASDAQ did carve out a small gain on the day, it didn't
get any help from the hardware stocks.  After Dell (NASDAQ:DELL)
reported last night that it would be cutting 3,000-4,000 jobs to
remain on track to meet earnings expectations, the stock pulled
back today.  Dell finished off $1.11 to $24.80 and took some of
its competitors with it.  Apple (NASDAQ:AAPL) close down $0.39 to
$24.57 and Gateway (NYSE:GTW) fell $0.35 to $18.00.

Legg Mason (NYSE:LM), the big brokerage company, took a hit today
after missing earnings estimates by $0.05.  The firm was also
downgraded by Merrill Lynch to a "neutral" from an "accumulate".
LM fell $3.26 to $47.00.

Healthcare stocks, as measured by the S&P Healthcare Index
(HCX.X) also seem to be catching a cold.  The index appears to be
struggling as a result of renewed interest in techs and improved
investor psychology.  A few big names in the group now appear to
be on the edge of rolling over.  United Health Services
(NYSE:UHS) lost trend line support at $81 today, as it fell $2.29
to $80.30 on volume of 540,000 shares.  Tenet Healthcare
(NYSE:THC) lost $0.70 to $43.05 and Unitedhealth Group (NYSE:UNH)
broke down through its 50-dma and ended the session lower by
$1.69 at $59.11.

And yes, there were some sectors that finished in the green
today.  The most notable of these were the semiconductors, as
they are directly tied to the health of the networkers and
usually are the first tech stocks to bottom.

The PHLX Semiconductor Index (SOX.X) rallied 9.68 to 640.73 on
the heels of small gains across many heavyweight chip stocks.
Intel (NASDAQ:INTC) rose $0.32 to $31.48, Texas Instruments
(NYSE:TXN) was lifted by $0.67 to $39.10 and Xilinx (NASDAQ:XLNX)
added $0.83 to $45.15.

Looking Forward, Always Forward

Judging by the reaction of traders to Cisco's conference call, it
might be a rough opening tomorrow.  At recent check, the stock
was trading down about $0.60 from its closing price of $20.36.

Individual stock news will be driving the market tomorrow, as
there is no significant economic news scheduled for Wednesday.
This leaves plenty of room for opening gaps and subsequent
retracement moves, so be wary of any big early morning moves.

Speaking of big moves, Toys-R-Us (NYSE:TOY) wasn't playing games
when it recently broke out of its long base pattern.  The reason
I have turned to this chart is to illustrate how market
psychology has indeed changed for the better.  As you can see,
TOY broke out on strong volume yesterday.  A few months ago,
sellers would have used a breakout move like this to either get
short or take profits.  However nowadays, moves like this are not
only attracting new buyers, but are also acting as launching pads
to further gains.

Chart of Toys R Us:



So traders should be starting to get a list of strong stocks
together that are currently consolidating in tight base patterns.
Through the use of limit orders, you could place an order to buy
these types of stocks as they emerge from their bases.  The best
part about these formations is the fact that should the stock
turn around, the base from which it emerged ideally provides
support, thereby limiting downside risk.  However, downside stops
should still be utilized after you initiate a new position, just
in case the move proves to be false.  The best place for these
stops is generally just below the bottom of the base pattern.

Happy Trading

Craig Seidler
Assistant Editor
www.SplitTrader.com





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

Hitting Singles

Many investors equate playing the market to sporting events.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=471


Tuesday's Split Announcements
=============================

None


=======================================
Wednesday's Expirations by Payable Date
=======================================

None





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

The PLAY LEGEND:

SplitTrader.com Play Recommendations.

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

On the SplitTrader.com website we have very detailed profiles
for the stocks we play.  Please take the time to visit the site
and look up a stock's profile if you are interested in more
information.
================================================================


=========
NEW PLAYS
=========


NEW SPLIT RUN PLAYS 05/08/01
============================

None


NEW SPLIT CANDIDATE PLAYS 05/08/01
==================================

None


NEW MOMENTUM PLAYS 05/08/01
============================

HD - Home Depot $50.01 +0.92 (+0.42)

One area of the economy that has been mostly impervious to the
well publicized slowdown has been home building and general home
improvement.  Just ask anybody you know who is involved in home
construction and they will tell you that they have a huge backlog
of business.  This trend clearly helps Home Depot, the nation's
third largest retailer and unquestioned leader of the home
improvement supply trade.  Also helping Home Depot is the fact
that lumber prices are starting to rise again.  Rising lumber
prices should help Home Depot to show greater than previously
expected profits.  Speaking of profits, Home Depot is scheduled to
report its earnings one week from today before the market opens.
Therefore, HD may be on the verge of an earnings expectation run.
It might be prudent to wait for HD to trade above today's high of
$50.15 before initiating a position.  If HD gaps up $1.50 or more
on the open, one might want to wait for a subsequent pullback
before going long.  HD is currently enjoying a very strong MACD
that is rising nicely and is pointing towards more gains.  Money
Flow has also been recently outstanding.  Initial support, in the
event of a pullback, should probably be found at $48.25, which is
right on a rising trendline.

Picked on May 8th @ $50.01
Change since picked +0.00
Stop Loss $45.88

 


=======
UPDATES
=======


SPLIT RUN PLAY UPDATES 05/08/01
===============================

SOTR | SouthTrust Corporation $46.75 |0.09 (+0.44)

SouthTrust Corporation has been consolidating in the $45.50-$47.50
range over the past five days. On Tuesday, shares of SOTR traded
to an intra-day high of $47.27 before pulling back to a close of
$46.75 on light volume of 451,000 shares. The stock is gaining
momentum as we approach the 2:1 split, payable on May 11th, so
SOTR could make a run at its all-time high in front of the payable
date. For now, support is the 20-dma at $46.25 with stronger
support at $45.75, Monday's intra-day low. Resistance has moved up
to Tuesday's intra-day high of $47.27 and then the April 26th
intra-day high of $48. Traders may consider starting new plays on
a bounce off of $46.25 or a move above $47.27 on volume of at
least 500,000 shares by noon. We are leaving our stops at $44 and
we plan to exit this play by Thursday afternoon.

Picked on April 19th @ $46.96
Change since picked |0.21
Stop Loss @ $44.00

 

===

XTO - Cross Timbers Oil Co. $26.85 +1.23 (+2.02)

Cross Timbers Oil enjoyed a very strong day, even though gains in
the AMEX Oil and Gas Index (XOI) were modest.  It is entirely
possible that XTO is a beneficiary of a consolidation trend within
the industry.  Barrett Resources (NYSE:BRR) agreed to be acquired
yesterday by Williams Cos (NYSE:WMB), and, consequently, enjoyed a
nice spike up in its share price.  Cross Timbers Oil and Barrett
Resources are similar companies because both are land based
regional drillers.  Today's rally was technically significant
because XTO crossed over and closed above its 50-DMA of $26.41.
The last time this event occurred, XTO traded straight to $28.75.
XTO may test this resistance soon; therefore, additional positions
could probably be added tomorrow assuming XTO stays above the 50-
DMA and does not gap up to the $28.75 resistance on the open.
Today's volume of 888,700 was solid and we would be more
encouraged about adding to positions if XTO starts ticking up with
first hour trading volume exceeding 200,000 shares.  Even more
encouraging is the fact that a rally tomorrow would likely cause
the MACD to issue a buy signal.  Please note that we have raised
our trailing stop to $25.50.

Picked May 6th @ $24.83
Change since picked +2.02
Stop Loss @ $23.50

 


SPLIT CANDIDATE PLAY UPDATES 05/08/01
=====================================

ASD | American Standard Companies $62.32 |0.18 (-0.18)

Momentum carried American Standard Companies, Inc. to an all-time
high of $63.30 during Monday's session. Unfortunately, the stock
reversed directions as fears of a weakening economy resurfaced. On
Tuesday, shares of ASD fell to an intra-day low of $61.10 before
bouncing back to close at $62.32 on volume of 309,000 shares. ASD
remains in an upward trend and the recent test of support should
allow the stock to move to new highs if the market heats up again.
In the meantime, support is now up to the 5-dma at $62.09 with
additional support at $61.04, the 10-dma. Resistance has come in
at Tuesday's intra-day high of $62.62 and then Monday's intra-day
high of $63.30. A bounce off of $62.09 or a move above $62.62 on
midday volume greater than 250,000 shares may be possible entry
points. We are keeping our stops at $58.50 as downside protection.

Picked on May 6th @ $62.50
Change since picked |0.18
Stop Loss @ $58.50

 

===

AYE | Allegheny Energy, Inc. $51.58 |0.42 (+0.58)

Allegheny Energy, Inc. sold off slightly on Tuesday after closing
at an all-time high of $52 in the previous session. Shares of AYE
traded in a tight range, hitting an intra-day high of $51.80 and
an intra-day low of $51.15, before closing at $51.58 on volume of
413,000 shares. Volume has stabilized following the secondary
offering on April 27th so AYE may be able to rally as we move
closer to the Annual Meeting on Thursday. We are looking for a
split announcement out of the meeting. Until then, support is the
5-dma at $50.97 with stronger support at $50.50, the 10-dma.
Resistance has moved up to Monday's intra-day high of $52 and then
possibly $53 or $54. Look for a bounce off of $50.97 or a move
above $52 on midday volume of at least 300,000 shares before
opening new positions. Our stops remain at $47.

Picked on April 29th @ $50.60
Change since picked +0.98
Stop Loss @ $47.00

 

===

BMET | Biomet Inc. $41.30 |0.94 (-1.25)

Biomet has been consolidating on light volume over the past five
sessions. On Tuesday, shares of BMET fell to an intra-day low of
$40.50. However, the stock made a recovery after a test of the 20-
dma. BMET ended the day at $41.30 on volume of 1.33 million
shares. The stock closed below the 10-dma for the first time since
April 16th and it is beginning to form a short-term downward
trend. On the positive side, the move is coming on light volume so
BMET may be able to hold the $40 mark if the stock continues to
trend lower. Going forward, support has fallen to the 20-dma at
$40.40 with additional support at $40, the April 19th intra-day
high. Resistance is now at Monday's intra-day high of $43 and then
the all-time high of $43.68. Traders should be looking for entry
points on a bounce off of $40.40 or a move above $43 on volume
greater than 900,000 shares by noon. We are leaving our stops at
$39.50 to limit potential losses.

Picked on May 3rd @ $42.16
Change since picked |0.86
Stop Loss @ $39.5

 

===

HRB - H & R Block Inc. $54.46 +0.25 (+1.08)

H & R Block righted a ship that had been listing late last week.
Over the past two days, this omnipresent tax preparer added over a
dollar to its value to regain support above its 10-dma at $54.00.
This mini rally has been fueled in part by the company's
announcement late last Thursday that it expects to exceed the
First Call consensus EPS of $2.91 for 2001.  As for the current
technical picture, HRB has support at its 20-dma at $53.20 and
immediate resistance at $55.00.  The MACD remains negative (but
just barely) and On-Balance Volume is beginning to show an upside
trend.   Traders considering a position in HRB should look for
strong volume, 250,000 shares or more traded by noon EDT, on a
move through resistance at $55.00 or a bounce off the 20-dma at
$53.21 before placing their trades.

Picked on April 18th @ $52.85
Change since picked +1.61
Stop Loss @ $49.25

 

===

TTC - Toro Company $46.30 -0.40 (-0.41)

Shares of TTC opened just above the resistance of $46.84 but could
not find any more buyers and subsequently pulled back.  Today's
volume of 28,700 shares was very light.  Despite these facts, TTC
may still be a compelling buy for many traders if it can move
above $47.00 tomorrow accompanied by midday volume exceeding
50,000 shares.  The stock is within shouting distance of its 52-
week high of $47.65.  Still, TTC trades at a very low P/E of 13.23
and the company is entering its busiest time of year.  Therefore,
there appears to be enough positive factors to entice buying.  The
technical picture is also good.  TTC enjoys a steadily rising 50-
DMA, which closed today at $44.56 and the stock has seen strong
Money Flow for most of this year.  The MACD is in positive
territory and the RSI has some breathing room before indicating an
overbought condition.

Picked April 29th @ $46.25
Change since picked +0.05
Stop Loss @ $43.50

 


MOMENTUM PLAY UPDATES 05/08/01
===============================

GTK - GTECH Holdings Corp $35.25 +1.29 (+1.25)

There was a decided interest in driving up the shares of GTK
today.  This lottery equipment concern managed to make a new high
yesterday of $35.70 before pulling back into the close.  Today's
attempt to establish yet another new high fell a little bit short.
Please note that we have raised our trailing stop to $34.00, just
in case the momentum is starting to wane.  The RSI is indicating
an extremely overbought condition.  This fact does not preclude
the possibility that momentum traders may continue to drive up the
price of GTK.  However, we placed our stop at today's low print
because a drop below this price could result in a bit of profit
taking.  Traders may be able to squeeze out some more profits by
entering a trade once GTK crosses $35.70 with first hour trading
volume exceeding 100,000 shares.  Traders should probably be
cautious about entering a new position if GTK gaps up to $37.00 or
higher on the open, in case the stock experiences quick profit
taking the way it did on Monday.

Picked on April 22nd @ $29.79
Change since picked +5.46
Stop Loss $32.00

 

===

LEA - Lear Corp. $36.37 -0.96 (-2.13)

Lear has succumbed to some profit taking this week after gaining
two dollars this past Friday.  Still, we're not terribly
concerned.  The sell off that occurred during Monday's and today's
sessions occurred on below-average volume of 325,000 shares.
What's more, LEA's MACD is remains positive and its On-Balance
Volume, which is flattening, hasn't reversed course.   At this
point, LEA is supported by its 20-dma at $35.12, followed by the
bottom of its recent consolidation range at $35.00.   Overhead,
LEA has immediate resistance at Friday's intra-day high of $38.50.
Should LEA breach this level, there is little to slow it down
until the April 1999 highs of $50 (though it could hit mild
resistance at the psychologically-significant $40 level).  Traders
considering a position in LEA should look for strong volume,
250,000 shares or more traded by noon EDT, on a move through
today's intra-day high of $37.60 or a bounce off support at $35.00
before placing their trades.

Picked on April 24th @ $36.20
Change since picked +0.17
Stop Loss @ $33.88

 

===

WSM - Williams Sonoma Inc. $31.37 -0.65 (-1.14)

WSM succumbed to some profit taking on Monday and Tuesday.  On
Monday WSM lost $0.49 and today it shed another $0.65.  There is
not need to panic, though, because volume averaged 325,000 through
both days, which is roughly 200,000 less than the three-month
daily average.   At this point, its possible that WSM could be
stalling ahead of its earnings release on May 15.  On the other
hand, it could just be consolidating before attempting another
move higher.  We think it's the latter.  To that end, WSM's
technical indicators look favorable.  The MACD and On-Balance
Volume both look strong.  On the downside, WSM has a first level
at its 10-dma at $30.53, followed by its 200-dma at $27.64.
Traders considering a position in WSM should look for strong
volume, 250,000 shares or more traded by noon EDT, on a move
through Friday's close of $32.14 or a bounce off support at $30.53
before placing their trades.

Picked on May 1st @ $31.10
Change since picked +0.27
Stop Loss @ $27.75

 


=====
DROPS
=====


SPLIT RUN PLAY DROPS 05/08/01
=============================

None


SPLIT CANDIDATE PLAY DROPS 05/08/01
===================================

None


MOMENTUM PLAY DROPS 05/08/01
=============================

None


WEDNESDAY'S PLAY-OF-THE-DAY
===========================

Tuesday, May 8, 2001
=============================

XTO - Cross Timbers Oil $26.85 +1.23 (+2.02)

Tuesday's Comment:

Cross Timbers Oil enjoyed a very strong day, even though gains in
the AMEX Oil and Gas Index (XOI) were modest.  It is entirely
possible that XTO is a beneficiary of a consolidation trend within
the industry.  Barrett Resources (NYSE:BRR) agreed to be acquired
yesterday by Williams Cos (NYSE:WMB), and, consequently, enjoyed a
nice spike up in its share price.  Cross Timbers Oil and Barrett
Resources are similar companies because both are land based
regional drillers.  Today's rally was technically significant
because XTO crossed over and closed above its 50-DMA of $26.41.
The last time this event occurred, XTO traded straight to $28.75.
XTO may test this resistance soon; therefore, additional positions
could probably be added tomorrow assuming XTO stays above the 50-
DMA and does not gap up to the $28.75 resistance on the open.
Today's volume of 888,700 was solid and we would be more
encouraged about adding to positions if XTO starts ticking up with
first hour trading volume exceeding 200,000 shares.  Even more
encouraging is the fact that a rally tomorrow would likely cause
the MACD to issue a buy signal.  Please note that we have raised
our trailing stop to $25.50.

Picked May 6th @ $24.83
Change since picked +2.02
Stop Loss @ $23.50

 





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