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Email Version, Section 1, Tuesday 05/15/2001
The SplitTrader.com Newsletter          Tuesday 05/15/2001 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/051501_1.asp
================================================================

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

Market Commentary - Fed Comes Through
Definition of the Day
Tuesday's Split Announcements - None
Wednesday's Expirations
Plays - New - Updates - Drops
Wednesday's Play-of-the-Day - OMG

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


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

Fed Comes Through

The Fed gave investors exactly what they wanted today.  In
cutting its Fed target rate by 50 basis points to 4%, hopes of a
sustained market rally remain alive and kicking.  The discount
rate was also lowered by 50 basis points, to 3.5%, and to top it
all off, the Fed said that it remains ready to cut rates again if
needed.

The Fed last cut rates five times in a row back in 1994.  At the
risk of comparing apples to oranges (this recession is very
different from 1994) the following year, in 1995, the Dow surged
from 3867 to 5181, or 34%.

However, the Fed doesn't necessarily want the market to go
straight to the moon.  What it does want to happen is for capital
expenditures to pick up and for corporate profitability to stop
eroding.

In its statements following the announcement today, the Fed
mentioned that inflationary pressures are expected to "remain
contained".  However, one has to wonder if Dr. Greenspan will now
step back and see how the full 250 basis point shot in the arm
since 1/1/01 treats his patient.  Because the economy takes a
good six months to fully process an interest rate cut, we will
not know how the economy will react to this stimulus until much
later this year.

The Fed also noted in its comments that excess inventories seem
to be dwindling and that consumer spending and housing "have held
up reasonably well."  Ironically, these were the same strengths
that caused many investors to recently question whether the Fed
would stay the course on fighting a recession.  But by stating
that they will remain on the watch for further weakness, the Fed
has all but said that they will do everything in their power to
avoid a recession.

Today's Markets

As expected, it was a volatile session on both the Dow and the
NASDAQ today.  Quiet morning trade ahead of the Fed move was
replaced by wide swings immediately following the announcement.
Granted the swings were smaller than usual due to the fact that
the Fed did its best to telegraph its move ahead of time.

The NASDAQ (COMPX) spent most of the session hovering just above
breakeven and ended the day up 3.79 at 2085.93 after a brief
foray into the red.  Volume came in surprisingly light (1.7
billion shares) given the good news from the Fed.  Stocks hitting
new highs beat out new lows 162 to 48.

The Dow (INDU) also closed near breakeven after a seesaw session.
The old-economy index added 4.36 to 10872.97.  Volume was also
disturbingly low on the NYSE, with only 1 billion shares changing
hands.  On a usual rate cut day, the NYSE can easily do 2 billion
shares.

Also as expected, Teasurys reacted negatively to the rate cut
today, as the Fed's continued aggressive stance has bond traders
already anticipating the next tightening cycle.  The 10-year bond
lost 15/32 to yield 5.48% and the 30-year note fell 26/32 to
yield 5.90%.

Stocks and Sectors on the Move

We didn't get the standing ovation that would have been expected
on a day like today.  This has many traders worried that it's
going to take an act of God to get the sidelined cash back into
the market.  Though today's market reaction was anticlimactic,
all we can do as traders is to monitor what has been working and
go with it.

Up until today, it has been the retailers that have been firing
on all cylinders.  However, the S&P Retail Index (RLX.X) lost
13.54 to 895.88 today on the heels of some mixed earnings reports
from selected heavyweights within the hot sector.

Dow component and former Splittrader Current Play, Home Depot
(NYSE:HD), reported profits of $0.27/share beating Street
estimates by $0.02/share and reiterated that it was comfortable
with its second-quarter estimates of $0.37/share.  HD moved ahead
by $0.95 to $50.10 on the news.

Fellow Dow stock, Wal-Mart (NYSE:WMT) also had good news for
investors today when it reported that first-quarter earnings met
consensus estimates of $0.31/share.  In addition, the
Bentonville, Arkansas retailer said that it would be upping the
anti on its share repurchase program to $3 billion worth of
outstanding stock.  WMT shares stumbled $2.35 to $52.00.

More than offsetting the good news out of WMT and HD was an
earnings warning out of J.C. Penny (NYSE:JCP).  JCP reported
earnings of $0.11/share, in line with estimates, but followed up
with lowered estimates for its upcoming second-quarter.  The
giant retailer now expects a second-quarter loss of $0.20-
$0.25/share as opposed to previous estimates of a loss of
$0.11/share.

Lastly, Target (NYSE:TGT) fell back into its base after having
its price target raised from $40 to $48 by Lehman Brothers.  The
brokerage firm also reiterated its "strong buy" on the stock, but
none of this was enough to keep shares of TGT above its pivot
point of $40.  Shares fell $1.40 to $38.30.

In other specific company news, Qualcomm (NASDAQ:QCOM) finally
caught a break when China announced contracts to purchase code
division multiple access wireless gear totaling $1.5 billion.
QCOM, mired in a downtrend since mid February, rose $2.58 to
$59.50 on the China news.

In after-hours news, one of the last big tech companies to report
earnings, Applied Materials (NASDAQ:AMAT), rang in with earnings
of $0.32/share, which missed estimates by $0.01/share.  They
mentioned that their core business continued to experience a
"severe decline" in their most recent quarter.

Looking Forward, Always Forward

On the schedule for release Wednesday morning is the April CPI
(Consumer Price Index) number and housing starts and housing
permits data.  While economic data should have a more muted
effect on the market since the Fed just cut, the housing start
numbers should give us another read on the all-important
homebuilding market.  This sector of the economy has been on a
tear and needs to hold up for investors to remain bullish on the
economy's near term health.

Look for homebuilding stocks to be volatile as a result of the
housing report.  Many of these issues are now in holding patterns
and are poised to break significantly to either direction in
response to the housing starts number.

Chart of Beazer Homes Usa:



In other areas of the market, look for sidelined cash to start
finding a home in tech and financials since the Fed has outright
said that it is not going to let us down.  We also have a lull
between now and earnings warning season that could set the table
for more potential gains before traders become unraveled by
warnings from companies that have fallen short on sales and new
orders.

What we want to see for the remainder of the week is for more
institutions to be placing bets.  We need a ramp up in volume to
get us over the 1265 level in the S&P 500 (SPX.X), the 11,000
level on the DOW and the 2250 level on the NASDAQ.

It's easy to see how this resistance is holding back big cap
stocks like Dow components IBM and GE.  A look at their
respective charts is proof that these resistance levels are
holding up strong.  Until we break through these technical
levels, the bears will still have one claw in the mix.

Craig Seidler
Assistant Editor
www.SplitTrader.com


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

Ex-Dividend

This is a period between the announcement of a dividend to be
paid and the actual payment date of the dividend.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=128


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

None


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

Chicos FAS (CHS) splits 3:2





=====================
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 05/15/01
============================

APPB - Applebee's International $43.20 -0.10 (+0.31)

Last week, Applebee's declared a 3-for-2 stock split.  This week,
we are adding Applebee's to our Current Play list, and with good
reason.  APPB has been in a strong up trend since March 1st,
advancing from a low of $30.50 to today's close of $43.20, a 43
percent gain.  Moreover, we think APPB could continue advancing
into its split payable scheduled for June 12th.  To that end, ABBP
posted a new all-time high today of $44.01, eclipsing resistance
at $42.50 in the process.  At this point, APPB has no immediate
overhead resistance (though the psychologically-significant $45.00
level could present a minor obstacle).  As for support, APPB has
the 10-dma at $42.94 followed by the 20-dma at $42.12.  Traders
considering a position in APPB should look for a move through
Tuesday's intra-day high of $44.01 or a bounce off the 10-dma on
volume of 150,000 shares traded by mid-day.  One caveat for
conservative traders, though, APPB's stochastic is showing it to
be overbought, so this trade could be a little more  risky than
usual.

Picked on May 15th @ $43.20
Change since picked 0.00
Stop Loss @ $40.50

 


NEW SPLIT CANDIDATE PLAYS 05/15/01
==================================

None


NEW MOMENTUM PLAYS 05/15/01
============================

None


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


SPLIT RUN PLAY UPDATES 05/15/01
===============================

XTO - Cross Timbers Oil $29.70 +0.76 (+1.70)

The AMEX Oil and Gas Index (XOI) has been one bright spot for the
market this week.  Today the XOI rallied 3.37 to 584.14.  We
suggested in our updates last week that XTO might be rallying
because of takeover speculation.  We were a little ahead of most
on this supposition.  Yesterday saw another major acquisition in
the oil and gas industry, as Kerr-McGee (NYSE:KMG) agreed to
purchase HS Resources (NYSE:HSE) for $1.7 billion.  During
coverage of the story of increasing acquisition activity in the
oil and gas sector, CNBC specifically included XTO on a short list
of potential acquisition targets.  This story probably contributed
to XTO's strong move so far this week.  The rally has enabled us
to raise our stop to $28.50.  The next entry opportunity may
present itself it XTO can trade through today's high of $29.90 and
accomplish this move with first hour trading volume exceeding
200,000 shares.  The longer term technical picture looks strong
because the MACD, OBV and Money Flow are all breaking out and the
RSI still has room before an overbought condition is indicated.

Picked May 6th @ $24.83
Change since picked +4.87
Stop Loss @ $28.50

 


SPLIT CANDIDATE PLAY UPDATES 05/15/01
=====================================

ASD - American Standard Companies $62.05 -0.41 (-1.22)

American Standard sold off after hitting an all-time high of
$63.85 last week. On Tuesday, shares of ASD fell to an intra-day
low of $61.17 before bouncing back to finish the day at $62.05 on
light volume of 267,000 shares. The stock closed below the 10-dma
for the first time since April 25th, breaking its upward trend.
Daily volume has declined over the past week, so ASD may spend
some time consolidating in the $61-$64 range until the volume
picks up. Until then, support is the 20-dma at $61.05 with
stronger support at the April 30th intra-day low of $60.
Resistance is now at Monday's intra-day high of $62.95 and then
$63.85, the all-time high. Traders may consider opening new
positions on a bounce off of $61.05 or a move above $62.95 on
volume of at least 250,000 shares by noon. We are leaving our
stops at $58.50 to limit potential losses.

Picked on May 6th @ $62.50
Change since picked -0.45
Stop Loss @ $58.50

 

===

AYE - Allegheny Energy, Inc. $53.35 +0.10 (+0.30)

Allegheny Energy is on a five-day winning streak. On Monday, AYE
traded to an all-time high of $53.85. The stock was under pressure
during most of Tuesday's session, hitting an intra-day low of
$52.65 just after the opening bell. However, AYE was able to rally
back into positive territory to a close of $54.35, ending the day
with a $0.10 gain on volume of 386,000 shares. The stock continues
to trend higher as the energy sector regains its momentum. On a
cautionary note, AYE put in its first lower low since May 2nd, so
we may get a round of profit taking in the near future. Going
forward, support is the 5-dma at $52.73 with additional support at
$52.16, Friday's intra-day high. Resistance has come in at
Monday's intra-day high of $53.85 and possibly the $55 mark. Look
for a bounce off of $52.73 or a breakout above $53.85 on midday
volume greater than 300,000 shares before starting new plays. Our
stops remain at $52 to protect gains.

Picked on April 29th @ $50.60
Change since picked +2.75
Stop Loss @ $52.00

 

===

BMET - Biomet Inc. $42.85 +1.37 (+2.25)

Biomet has regained its momentum over the past three sessions. On
Tuesday, shares of BMET hit an intra-day high of $43.30 before
pulling back to a close of $42.85 on heavy volume of 2.97 million
shares. BMET has made three consecutive higher lows after a test
of major support at the 50-dma. Volume spiked on Tuesday and the
stock was able to close above the 10-dma. The downward trend has
been broken and the MACD is turning positive, so BMET could be
ready to challenge its all-time high. In the meantime, support has
moved up to the May 8th intra-day high of $42.49 with stronger
support at the 10-dma $41.50. Resistance is the all-time of $43.68
and then $45. A bounce off of $42.49 or a breakout above $43.68 on
midday volume of at least 900,000 shares may be possible entry
points. Our stops are holding steady at $39.50.

Picked on May 3rd @ $42.16
Change since picked +0.69
Stop Loss @ $39.50

 

===

HRB - H & R Block Inc. $56.08 +0.19 (+0.02)

H & R Block is turning out to be the little engine that could.
Just when we thought that HRB was set to rollover, it ekes out
another gain instead.  In fact, HRB set another 52-week high today
by closing at $56.08.  At this point, though, we are concerned
that HRB's engine could be running out of steam.  Today's advance
came on below average volume of 299,000 shares traded, which is
200,000 less than the three-month average daily volume.  Moreover,
On-Balance Volume is flattening, which could portend a lost of
momentum.  Still, if HRB rolls, we doubt that it will roll far.
The stock has support at its 10-dma at $54.78 followed by the 40-
dma at $52.09.  As for resistance, we don't see any significant
resistance until the July 1999 highs of $59.00.  Traders
considering a position in HRB should look for strong volume,
250,000 shares or more traded by noon EDT, on a move through
today's intra-day high of $56.45 or a bounce off the 10-dma before
placing their trades.  To protect our gains, we've moved our stop
up to $55.00.

Picked on April 18th @ $52.85
Change since picked +3.23
Stop Loss @ $55.00

 

===

OMG - OM Group, Inc. $59.80 +1.20 (+1.84)

OM Group just keeps on keeping on.  Today the company's stock
rallied another $1.20 to close at an all-time high of $59.80. Much
of the increase could be attributed to yesterday's report that the
company's cobalt sales volume was up 18 percent in the first
quarter and that recent increases in battery demand from the
battery market have limited availability of material.  OMG is
breaking out after four months of consolidation, so it may
continue to trend higher on average volume due to improving
fundamentals. For now, OMG has support at Monday's intra-day high
of $59.01 with additional support at the 5-dma at $58.04.
Resistance was taken out on Tuesday, so new resistance may show up
at $60 or $61. Look for entry points on a bounce off of $59 or a
breakout above $60 on volume of at least 60,000 shares by noon. We
have moved our stops up to $56.75, just under the 10-dma, to limit
potential losses.

Picked on May 13th @ $57.96
Change since picked +1.84
Stop Loss @ $56.75

 

===

STU - The Student Loan Corporation $69.15 +0.47 (+1.50)

The Student Loan Corporation broke its downward trend in
anticipation of a rate cut from the Fed. On Tuesday, shares of STU
hit an intra-day high of $69.48 before pulling back to close at
$69.15 on volume of 8,800 shares. STU closed above the 10-dma for
the first time since April 26th and the MACD is starting to turn
around. The stock has now made five consecutive higher highs
coupled with higher lows, so STU could continue to move higher as
we approach the Annual Meeting on May 16th. From a technical
standpoint, support is the 10-dma at $68.31 with stronger support
at Monday's intra-day low of $67.75.  Resistance is the May 3rd
intra-day high of $69.95 and then the 20-dma at $71.43. Consider
entry points on a bounce off of $68.31 or a move above $69.95 on
volume greater than 15,000 shares by noon. We are keeping our
stops at $65 to limit potential losses.

Picked on May 10th @ $68.20
Change since picked +0.95
Stop Loss @ $65.00

 

===

TTC - Toro Company $46.50 +0.12 (+0.51)

Last week saw some surprisingly strong retail numbers that suggest
that consumer confidence is rising.  This has to be good news for
Toro, as the company enters it busiest season for selling lawn and
gardening equipment.  TTC's modest advance today was accompanied
by volume that was a little better than last week's anemic 20,000
to 30,000 average.  Perhaps TTC is on the verge of finally
breaking out of its very narrow trading range between $45.88 and
$47.00.  A rally above $47.00, accompanied by midday volume
exceeding 30,000 shares, may provide the next good entry signal.
If this occurs, TTC might find resistance at its 52-week high of
$47.65.  Hopefully, the rally will come soon because the MACD is
threatening to issue a sell signal.  On the plus side is the RSI,
which continues to indicate that there is plenty of rally room
before the stock would be considered to be overbought.

Picked April 29th @ $46.25
Change since picked +0.25
Stop Loss @ $43.50

 


MOMENTUM PLAY UPDATES 05/15/01
===============================

GTK - GTECH Holdings $35.50 +0.11 (+0.14)

GTECH never really got going today, even though it reported some
good news concerning its ongoing operations.  GTECH was awarded a
five-year contract extension with the Rhode Island Lottery to
continue providing the state with lottery equipment and online
services.  Nevertheless, GTK was able to add only $0.11 to its
share value.  Technically speaking, GTK has started to pullback in
an attempt to consolidate its most recent rally. That said, GTK
appears to have found some support at $35.00 and is still one of
the strongest looking stocks in this market.  Momentum traders
looking for a buy are probably including GTK on their short list
of candidates.  GTK may be a compelling buy tomorrow if it can
hold the $35.00 support and trade through its 52-week high of
$36.80.  New positions might be more enticing if the new high is
accompanied by midday volume exceeding 150,000 shares.  The
longer-term technical picture still looks pretty good.  The OBV is
still advancing and the MACD is maintaining its rally.  However,
the RSI is indicating an extremely overbought condition that may
have to be corrected before GTK can make its next advance.

Picked on April 22nd @ $29.79
Change since picked +5.71
Stop Loss $34.00

 

===

LEA - Lear Corp. $36.00 +0.50 (-0.65)

Last week, we were concerned that Lear might rollover because it
traded lower six-consecutive sessions.  However, it's now starting
to look like LEA may just be consolidating near its previous
consolidation base at $35.00.  We were encouraged that today's
advance came on above-average volume of 560,800 shares traded,
which was 120,000 shares greater than the three-month daily
average of 440,000.  Still, LEA could run into resistance at its
10-dma at $36.46.  This is a level LEA has been unable to breach
over the past five sessions.  As for support, LEA has the
aforementioned consolidation base of 35.00.  Traders considering a
position in LEA should look for strong volume, 250,000 shares or
more traded by noon EDT, on a move through the 10-dma or a bounce
off of $35.00 before placing their trades.  But to be honest,
given LEA's technical picture, we doubt it will offer much price
action.

Picked on April 24th @ $36.20
Change since picked -0.20
Stop Loss @ $33.88

 


=====
DROPS
=====


SPLIT RUN PLAY DROPS 05/15/01
=============================

KNGT - Knight Transportation $27.48 +2.12 (-0.06)

KNGT suffered a round of selling yesterday that knocked us out of
this play.  The drop was unusual because it was not precipitated
by any news.  However, the quick exit from this play illustrates
the risk associated with stocks that have low average daily
volume.  The ADV for KNGT is 63,400.  The drop was likely due to
one major investor that exited his position because KNGT
immediately snapped back today. Of course, this is just
speculation because we do not know for sure why KNGT suffered from
this unusual volatility over the past two days.

Picked on May 13th @ $27.54
Profit/Loss -1.79 (6%) (Stopped Monday @ $25.75)
Best Profit +0.09 (0%)

 


SPLIT CANDIDATE PLAY DROPS 05/15/01
===================================

None


MOMENTUM PLAY DROPS 05/15/01
=============================

HD - Home Depot $50.10 +0.95 (+0.22)

This play never really got going for us. This was probably due to
the fact that the overall market is stuck in a narrow trading
range.  The good consumer confidence news last week suggested that
Home Depot might be able to exceed analysts earnings estimates
when the company reported this morning.  Sure enough, Home Depot
beat the consensus estimates by 2 pennies by reporting profits of
$0.27 a share. If HD can continue to tick up like it did today, we
may jump on this stock again.

Picked on May 8th @ $50.01
Profit/Loss -0.86 (2%) (Stopped Monday @ $49.15)
Best Profit +0.24 (0%)

 

===

WSM - Williams Sonoma Inc. $30.21 +0.21 (+0.12)

Monday was the end of the road for WSM, as we dropped the retailer
ahead of it earnings announcements today.  For the record, WSM
posted earnings of $492,000, or $0.01 per share, for the first
quarter, versus $4.8 million, or $0.08 per share, in the year-ago
period.  Unfortunately, we exit WSM with a $1.10 loss.

Picked on May 1st @ $31.10
Profit/Loss -1.10 (4%)(Stopped Monday @ $30.00)
Best Profit +1.75 (6%)

 


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

Tuesday, May 15, 2001
=============================

OMG - OM Group, Inc. $59.80 +1.20 (+1.84)

Tuesday's Comment:

OM Group just keeps on keeping on.  Over the past week, OMG has
rallied nearly five points after breaking free of its
consolidation base at $55.00.  Today, the company's stock rallied
$1.20 to close at an all-time high of $59.80.  Much of today's
enthusiasm could be attributed to yesterday's report that the
company's cobalt sales volume was up 18 percent in the first
quarter and that recent increases in battery demand from the
battery market have limited availability of material.  For now,
OMG has support at Monday's intra-day high of $59.01 with
additional support at the 5-dma at $58.04. Resistance was taken
out on Tuesday, so new resistance may show up at $60 or $61. Look
for entry points on a bounce off of $59 or a breakout above $60 on
volume of at least 60,000 shares by noon. We have moved our stops
up to $56.75, just under the 10-dma, to limit potential losses.

Picked on May 13th @ $57.96
Change since picked +1.84
Stop Loss @ $56.75

 





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