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Email Version, Section 1, Wednesday 05/16/2001
The Newsletter        Wednesday 05/16/2001 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:

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In This Newsletter:

Market Commentary - Three Cuts and a Bump
Definition of the Day
Wednesday's Split Announcements - EGBN, MTON
Thursday's Expirations
Stock Plays - New - Updates - Drops
Thursday's Play-of-the-Day - TTC


Market Commentary

Three Cuts and a Bump

No, I'm not referring to a bad outing with a dull razor.  What I
am referring to is the old Wall Street adage of "Don't Fight the
Fed," which many traders wisely took to heart today.  After
yesterday's fifth-consecutive 50 basis point cut in the fed funds
rate, traders raised the white flag and decided to put some of
those long-accumulating money market reserves to work.

In reality, though, they've been putting these reserves to work
ahead of yesterday's latest cut in interest rates.  In fact,
they've been putting them to work since the third-consecutive 50
basis point cut that occurred on March 20.  Since then, the three
major market indices have rallied a minimum of 13 percent.  More
impressively, they've rallied more than 16 percent from their
2001 lows.

Historically, or least for 12 out of the past 13 times, when the
Fed has cut interest rates three-consecutive times the S&P 500
Index (SPX) has traded higher six months later.   This is why
three-consecutive fed funds rate cuts has been dubbed "three cuts
and a bump."

Few stocks were bumped harder than the Old-Economy issues were
today.  The Dow Jones Industrial Average (INDU) roared to life to
trade above the magical 11,000 level for the first time in four
months.  More importantly, though, it closed above this level for
the first time since last September by posting a 342.95 point, or
3.15 percent, gain to finish the session at 11,215.95.

As most of us are aware (if only because we've been droning on
about it for the past 10 months), the INDU has had a heckuva time
breaching, much less closing above, above 11,000.  Now, with
today's close, the INDU can consider challenging resistance at
11,250, which coincides with the year 2000 mid-summer closing

Chart of the Dow Jones Industrial Average:

To say the rally in the INDU issues was broad-based would be an
understatement.  In fact, 29 of the 30 blue-chip stocks finished
today's session in the black.  The biggest gains were seen in
shares of Alcoa (NYSE:AA), American Express (NYSE:AXP),
Caterpillar (NYSE:CAT), Coca-Cola (NYSE:KO), United Technologies
(NYSE:UTX), International Paper (NYSE:IP) and Minnesota Mining
and Manufacturing (NYSE:MMM).  The only slacker among the
industrials was retail behemoth Wal-Mart (NYSE:WMT), which closed
down $0.35 to $51.65.

Equally impressive to many INDU followers was the breadth and
volume on the NYSE.  More than two stocks rose for every one that
fell on the Big Broad, as more than 1.3 billion shares changed
hands, a 9.7 percent increase over the three-month daily average.
In other words, there was definitely trader enthusiasm behind
today's advance.

As for the New Economy, it performed even better than the Old
Economy on a percentage measure.  The Nasdaq Composite Index
(COMPX) surged ahead 80.86 points, or 3.88 percent, to end the
session at 2,166.66, which means the COMPX is once again
approaching resistance at 2,200.

Powering much of the COMPX's gains today were its semiconductor
issues.  The PHLX Semiconductor Index (SOX) soared 6.5 percent
despite a downgrade by Goldman Sachs on three communications chip
companies: Applied Micro Circuits  (Nasdaq:AMCC), PMC-Sierra
(Nasdaq:PMCS) and Vitesse Semiconductor (Nasdaq:VTSS).  For the
record, all three finished the day in the black.

As did the broader market.  The S&P 500 Index (SPX) surged 35.55
points, or 2.84 percent, to close at 1,284.99, a level not seen
since February 20th.  What's more, today's advance put the SPX
above resistance at the 38 percent retracement from its 2001
high, which means it's now well-position to challenge resistance
at 1,300.

Chart of the S&P 500 Index:

Another portfolio of stocks that's well-position to challenge
resistance is the Splittrader Current Play list (which, by the
way, we increased by two members today thanks to a strong rally
in two of our Watch List stocks).  As it now stands, everyone of
our Current Play list stocks is in the black (although we use
green on the Website).  Our biggest gainers on the day were OM
Group (NYSE:OMG) and H & R Block (NYSE:HRB), which finished the
day up 3.42 percent and 4.58 percent, respectively.

In earnings news, gourmet donut maker to the gourmand, Krispy
Kreme (Nasdaq:KREM), soared $7.00 to $56.40 after reporting
fiscal first-quarter earnings of $20 a share, surpassing the
First Call estimate by $0.03. In addition, Krispy Kreme raised
its EPS forecast for fiscal 2002 to $0.77 from current
expectations of $0.70.

Another earnings winner was Federated Department Stores
(NYSE:FD), which gained $2.29 to $46.29 after posting fiscal
first-quarter earnings of $0.42 a share, $0.06 better than the
First Call estimate. The retailer also said it expects to meet
earnings expectations for its full fiscal year.

The Fed's interest rate cuts appear to finally be taking hold on
the corporate bottom line.  According to First Call, analysts see
profits for S&P 500 companies growing 8.9 percent in the fourth
quarter, rebounding from declines of 11.4 percent in the current
quarter and 2.8 percent in the third quarter.  Moreover, these
same analysts see a surge of 15.3 percent in corporate earnings
for first quarter of 2002.

On the economic front, the data released today seemed to support
the Fed's assertion that inflation remains under control.  To
that end, the Consumer Price Index (CPI) came in under
expectations in April, advancing 0.3 percent for the month
against expectations of 0.4 percent, while the core rate posted a
0.2 percent gain, which matched the consensus forecast. All in
all, today's CPI report did not contain any information that
would alter the Fed's liquidity-adding bias.

Given the latest slate of earnings and economic news, it's
probably safe to say the longer-term trend looks promising, which
has to be a kick in the pants to those morose dunderheads
predicting COMPX 1,000 and INDU 7,000 as recently as last month
on CNBC (remember, Wall Street is filled with interminable

Short-term, however, I'd be leery about jumping in at this
moment, particularly after today's strong gains.  I wouldn't be
surprised if the market succumbs to profit taking for the
remainder of the week.  The key will be whether the INDU and the
COMPX can hold 11,000 and 2,100, respectively.  If they do, I
think the market should retain much of its gains accumulated over
the past six weeks.

On the other hand, should the INDU close the week below 11,000, I
think traders will be wary about committing new money to the
market, which means we could see a brief period of stagnation.
With that said, I think better entry points will present
themselves over the coming weeks.

S.P. Brown

Definition of the Day

Growth Stock

A company that, relative to other companies, is growing at an
accelerated rate.

For the complete definition, please go to:

Wednesday's Split Announcements

Wednesday, May 16, 2001, During the Market

Eagle Bancorp announces a 7-for-5 stock split

During regular trading today, the Board of Directors of Eagle
Bancorp Inc. (Nasdaq: EGBN) announced a 7-for-5 stock split,
payable on June 15, 2001 in the form of a 40% dividend on its
common stock.

For the complete announcement, please go to:


Wednesday, May 16, 2001, After the Market

Metro One stock soars, company declares first-ever stock split

Following the closing bell, Metro One Telecommunications, Inc.
(Nasdaq:MTON) announced the Board of Directors' approval of a 3-
for-2 stock split, payable on June 29 in the form of a 50 percent
stock dividend. Fractional shares will be paid out in cash.

For the complete announcement, please go to:

Thursday's Expirations by Payable Date


===================== Plays

The PLAY LEGEND: 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

BoD = Board of Directors meeting
ADV = Average Daily Volume
dma = daily moving average

At the 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.



SDS - SunGard Data Systems $62.00 +3.05 (+5.53)

SunGard specializes in offering information technology solutions
to the financial community.  They have products that make it
easier for companies to web-enable clients, process transactions
electronically and outsource business-critical operations.
Fundamentally speaking, the company has topped analysts' earnings
expectations for the last four quarters in a row.  With the Fed
cutting rates for the fifth time this year, SDS is hoping that
this leads to a ramp up in trading that keeps SunGard's string of
double digit profit growth alive.  Looking at the chart, SDS has
just broken out of a cup and handle formation on strong volume of
1.4 million shares.  This represents an increase of 300,000 shares
over SDS's three-month daily average volume.  This is precisely
what you want to see following a period of sideways action on
lower volume.  Today's strong move also higher helped to avoid a
sell signal out of SDS's MACD.  Going forward, new entries could
be timed on a bounce off support at $60, or more aggressive
traders could pick up the stock as long as it doesn't trade above
today's high of $62.75.  Look for daily volume to remain in the 1
million-share neighborhood on either of these moves.  We are
placing our stops at support of $58.40 to protect against a

Picked on May 16th @ $62.00
Change since picked +0.00
Stop Loss @ $58.40



ITG - Investment Technology Group $54.52 +1.69 (+3.61)

By lowering the costs of trading for institutions, ITG provides
their clients with an edge in the highly competitive financial
services industry.  This is because the lower trading costs can be
passed onto the clients in the form of lower management fees.  ITG
has also benefited from increased coverage by the brokerage
community.  Since the first of the year, three additional
brokerage firms have picked up ITG.  Just recently the stock was
initiated with a "buy" rating from Bear Sterns.  Turning to ITG's
impressive chart, the stock has just successfully broken out of a
symmetrical triangle formation.  This is usually a bullish sign
for a stock, and according to the width of the triangle, the next
stop for our new play is $70.  Traders might want to consider
initiating new plays in ITG if the stock can settle back at least
$1.00 on low volume of less than 100,000 shares by midday, with a
subsequent bounce into the close.  Otherwise, aggressive traders
might want to see if ITG can conquer resistance at $55.00 on
volume of at least 150,000 by midday before initiating new
positions.  We are setting our initial stop at $51.40 to protect
on the downside.

Picked on May 16th @ $54.52
Change since picked +0.00
Stop Loss @ $51.40


Thursday's Play-of-the-Day

Wednesday, May 16, 2001

TTC - Toro Company $47.80 +1.30 (+1.81)

Tuesday's Comment:

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

Wednesday's Update:

TTC finally broke out of an ascending triangle on Wednesday,
accompanied by volume that tells us that this next move higher
might have legs.  While volume still came in shy of the three-
month average of 90,000 shares, the 78,000 traded on Wednesday
was a definite improvement over the anemic five-day average of
30,000.  Toro had been building an ascending triangle with the
upper triangle line forming resistance at $47.  Now that TTC has
freed itself from this bullish formation, the price target on the
landscaping equipment maker becomes roughly $54.  This target is
reached by adding the height of the triangle at its thickest part
($7.00) to the top of the triangle at $47.  In addition, today's
$1.30 move higher kept the MACD from issuing a sell signal.
Traders might consider initiating new positions on a bounce off
$47 (now support) or a surge through todays high of $48 on volume
of at least $35,000 by midday.

Picked April 29th @ $46.25
Change since picked +1.55
Stop Loss @ $43.50



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