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Email Version, Section 1, Monday 05/21/01
The Newsletter           Monday 05/21/2001 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 -

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In This Newsletter:
Market Commentary - Open Season On Bears
Definition of the Day
Monday's Split Announcements - DP
Tuesday's Expirations
Tuesday's Play-of-the-Day - ITG

Market Commentary

Open Season on Bears

Critically wounded and limping into the sunset, bears are under
continued attack.  There is an incredible amount of cash sloshing
around in money market accounts and the fifth consecutive rate cut
has inspired some to put their cash to work.

Friday's option expiration related trading was quite impressive
and although there is typically a pullback on the Monday following
expiration, the momentum is so strong that the rally extended into
today's trading, especially among the resurgent technology stocks.
It is becoming increasingly evident that the final capitulation is
behind us.  Investors who wanted to shed their technology stock
holdings have probably completed their selling.  That said,
markets rarely go in one direction forever and the rally will
eventually run out of steam as many stocks approach heavy overhead

The NASDAQ (COMPX) was very strong today with a triple digit gain
of 106.66 and a close at 2305.54.  The bigger names in the NASDAQ
were particularly strong, as the NASDAQ 100 (NDX) picked up 125.00
points to a close of 2053.  Volume was solid for a Monday with
2.28 billion shares traded.  Advancers trumped decliners by a 13
to 7 ratio.

The surging big names of technology included Cisco Systems
(NASDAQ:CSCO) up $2.63 to $22.83, Sun Microsystems (NASDAQ:SUNW)
gained $2.99 to $22.96, Dell Computer (NASDAQ:DELL) tacked on
$1.17 to $25.96 and JDS Uniphase (NASDAQ:JDSU) rallied $2.30 to

There were also some incredible gains among Internet
infrastructure and software stocks.  Seibel Systems (NASDAQ:SEBL)
surged $5.76 to $54.97, Ciena (NASDAQ:CIEN) gained $3.44 to
$60.79, Brocade Communications (NASDAQ:BRCD) launched itself $7.35
to $53.26, Veritas Software (NASDAQ:VRTS) picked up $6.19 to
$80.00 and Verisign (NASDAQ:VRSN) rallied $6.92 to $67.66.

The PHLX Semiconductor Index (SOX.X) was also in rally mode.  Some
of the stronger chip stocks included Applied Materials
(NASDAQ:AMAT) up $2.52 to $57.52, Linear Technologies
(NASDAQ:LLTC) rallied $5.34 to $58.00,  Integrated Device
Technologies (NASDAQ:IDTI) powered ahead $6.16 to $50.24, Applied
Micro Circuits (NASDAQ:AMCC) recovered $2.98 to $26.49, Teradyne
(NYSE:TER) surged $4.49 to $47.19 and Texas Instruments (NYSE:TXN)
gained $2.15 to $41.86.

Speaking of the NYSE, it was a little slower on the big board than
it was in the tech universe.  However, the Dow Jones Industrials
(INDU) did manage to post a gain despite strong selling in
component Proctor & Gamble (NYSE:PG), which dropped $2.23 to
$65.25 following the company's announced plans to purchase
Bristol-Myers (NYSE:BMY) Clairol unit.  Several stocks contributed
to the modest rise in the DJIA.  Walt Disney (NYSE:DIS) was up
$1.68 to $34.28 in anticipation of the release of the company's
potential blockbuster film "Pearl Harbor", American Express
(NYSE:AXP) gained $1.29 to $44.99, Wal Mart (NYSE:WMT) tacked on
$1.16 to $53.20 and Intel (NASDAQ:INTC) rallied $1.14 to $29.90
despite lowered earnings expectations coming from Merrill Lynch.

The DJIA finished the day with a gain of 36.18 points and closed
at 11,337.92.  The day closed with volume of 1.17 billion shares
and there was a very solid ratio of 21 winners for every 10
decliners on the NYSE.

AOL-Time Warner (NYSE:AOL) was noticeably strong and helped the
NYSE with a gain of $2.17 to $56.60.  Retailing giant Best Buy
(NYSE:BBY) powered ahead by $5.96 to $62.11 and Corning (NYSE:GLW)
recovered with a positive move of $1.71 to $22.65.  Electronic
component manufacturer, Celestica (NYSE:CLS) surged $7.16 to
$63.01 and Celera Genomics (NYSE:CRA) tacked on $6.07 to $47.22.

Momentum traders were very active today and this fact helped
several stocks on the Play List.  In fact several
of our stocks surged to new 52-week highs including: Applebee's
(NASDAQ:APPB) gained $1.23 to $45.33, Allegheny Energy (NYSE:AYE)
picked up $0.80 to $54.60,  Black Hills Corp (NYSE:BKH) rallied
$2.06 to $58.00, Biomet (NASDAQ:BMET) jumped $1.32 to $45.59, H&R
Block (NYSE:HRB) was a solid advancer with a gain of $3.25 to
$61.71, Donaldson (NYSE:DCI) moved up $0.93 to $31.70 and GTECH
Holdings (NYSE:GTK) plowed ahead by $0.93 to $37.54.

We are happy to report that our entire list saw gains today with
one exception; American Standard (NYSE:ASD), which dropped a
modest $0.20 to $65.25.  If there is another rally tomorrow, most
of you will probably want to pay close attention to Tuesday's Play
Updates, which will likely include the raising of several of our
suggested trailing stops.  At some point this rally will have to
correct and we want to lock in profits.  In the meantime, enjoy
the ride!

In addition to the previously mentioned rally among semiconductor
stocks several other sector indices were quite strong.  The AMEX
Networking Index gained 26.07 to 487.26.  Brokerage stocks surged
late in the day presumably due to the much better investing
climate.  The AMEX Broker/Dealer Index (XBD) powered ahead by
26.26 to 562.06.  The Biotechnology Index (BTK) joined the
technology rally with a gain of 37.44 to 638.40.  Biotech's were
lifted by a positive article in Barron's over the weekend that
highlighted some of the promising developments in the fight
against cancer. There was a little profit taking in the oil patch,
as the AMEX Oil Index (XOI) slipped 3.2 to 603.12.

The broader market indices all enjoyed gains today.  The S&P 500
(SPX) picked up 20.90 to 1312.85.  The NASDAQ 100 (OEX) rallied
10.22 to 678.60 and small cap stocks, represented by the Russell
2000 (RUT) were also strong and pushed this index up 9.63 to

The bond market was able to rally despite the strong advance among
technology stocks.  The 10-year Treasury note was up 6/32 to a
yield of 5.385.  The 30-year government bond gained 11/32 to a
yield of 5.74%.

Much of the technology stock rally has been driven by hopes that
economic conditions will start to improve in the upcoming
quarters.  That said, there was yet another warning within the
tech sector after the close.   Chartered Semiconductor
(NASDAQ:CHRT) told the investment community to expect a huge 48
percent sequential decline in revenue for the second quarter.
Previously the company had expected a more modest decline of 25
percent.  CHRT now expects to report a loss of 76 to 78 cents.
CHRT finished the regular trading session up $1.65 to $32.75 and
has subsequently dropped to $32.00 in after hours trading.

Looking ahead to tomorrow, the early trading could be concentrated
among the retail stocks.  Several high profile retailers will be
reporting earnings before the market opens.  Here is a partial
list and the expected profits; BJ's Wholesale (NYSE:BJ) $0.29,
Staples (NASDAQ:SPLS) $0.09, Talbots (NYSE:TLB) $0.62 and Target
(NYSE:TGT) $0.28.

There are also several technology stocks that will be reporting
their earnings after the close.  Agile Software (NASDAQ:AGIL) -
$0.05, Computer Associates (NYSE:CA) $0.45, ECI Telecom
(NASDAQ:ECIL) -$0.14, Intuit (NASDAQ:INTU) $0.53, Novell
(NASDAQ:NOVL) $0.02, Semtech Corp (NASDAQ:SMTC) $0.18 and VA Linux
Systems (NASDAQ:LNUX) -$0.40.

Today's move on the NASDAQ saw the index take out the 2250
resistance and keep going.  The extension of the rally could have
been due to many bears scrambling to cover their short positions
once the resistance was surpassed.  We saw a similar reaction last
week when the INDU finally closed above the important 11,000
resistance.  The NASDAQ's technical picture is nevertheless
neutral.  While the MACD was able to turn positive, which usually
is a buy signal, the RSI is telling us that the NASDAQ is clearly
overbought in the short term.  A positive open tomorrow may extend
the overbought condition, a rally to the 2450 resistance is
possible by the end of the week. The continued strength of the
rally will depend upon how many more bears need to be squeezed and
how many bulls fear the train has left the station without them.

In my opinion, I believe that a modest pullback is the more likely
scenario.  Bullish sentiment is rising and this is a contrary
indicator. A pullback to the 2100 would be very healthy for the
market and it would alleviate the overbought condition.  It would
also enable the market to regroup, consolidate and build a base
that could help the NASDAQ make its next push, perhaps above 2500.
We are fast approaching the June earnings season and we will start
to see pre-releases next week.  The June quarter has historically
been the weakest quarter of the year for technology firms, even in
good years.

The worst is probably behind us, but that does not mean that the
NASDAQ is ready to start moving higher by leaps and bounds every
day.  Picking a top for this rally is, as always, impossible.
That is why we continue to be aggressive with our trailing stops.
Selectively taking profits enables one to raise cash for the next
trading opportunity.

The DJIA has a couple of technical characteristics that are
similar to the NASDAQ's.  The MACD is positive again after
offering a false sell signal last week.  However, the RSI is
indicating an overbought condition.  Incredibly, the INDU is less
than 200 points away from its all time closing high.  This fact
makes one question whether the economy has (or will) improve so
dramatically as to justify a renewal of the bull market so
quickly.  That said, there are still some very good looking
individual stocks out there and as long as momentum investors keep
driving them up one can probably go with the flow.  Just be wary
of pullbacks that can eat into profits.  Long term investors can
probably take heart and with a little patience these types of
investors will probably be able to pick up some of his or her
favorites at lower prices over the next couple of weeks.

Good Luck! And may all of your trades be winning ones!

Jim Booth
Research Analyst

Definition of the Day

Moving Average Convergence/Divergence Indicator

A technical analysis indicator that measures the distance between
two moving averages and overlays a moving average signal line as a

For the complete definition, please go to:

Monday's Split Announcements

Monday, May 21, 2001, Before the Bell

Diagnostic Products Approves 2-for-1 Stock Split

SplitTrader candidate, Diagnostic Products Corp. (NYSE:DP)
announced before today's opening bell the Board of Directors'
approval of a 2-for-1 stock split, payable on or about June 18,

This marks the third stock split for DP and will effectively
increase the number of outstanding shares to 28 million and the
float to 17.6 million shares. There are just enough authorized
shares to accommodate the split, with 30 million as the current
total approved for issuance to the public.

For the complete announcement, please go to:

Tuesday'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.

You will see:
Stock Symbol, Company Name, Closing Price, Change for the Week.
Following the play you will find: 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.

Play of the Day (For Tuesday)
Monday, May 21, 2001

ITG - Investment Technology  $57.80 +0.91

Sunday's Comment:

On Friday, Jeffries Group analyst Charlotte Chamberlain said that
ITG stands to benefit from the recent Instinet (INET) IPO, if
only because it's a better company. According to Chamberlain, ITG
has booked a 32 percent annual growth rate in pre-tax income over
the past four years, compared with 9 percent for Instinet. We
guess she is suggesting that ITG should be afforded a higher
value, which we agree. Unfortunately, though, the market doesn't,
as ITG lost $0.71 to close at $53.89. Despite the kudos from
Chamberlain, we think ITG might take a breather after this week's
strong run. In fact, ITG is now bumping up against resistance at
$55.00, so it's possible that it might want to consolidate
between $52.50 and $55.00 before attempting another leg up. At
this point, ITG has support provided by its 10-dma at $52.16
followed by additional support at its last consolidation base at
$50. Traders considering a position in ITG should look for a move
through resistance at $55.00 or a bounce off Wednesday's intra-
day low of $52.50 on volume of 100,000 shares traded by noon EDT
before placing their trades.

Monday's Update:

Since the AMEX Broker/Dealer Index (XBD.X) broke out on Monday,
we feel ITG cannot be far behind.  In fact, ITG made a late day
run above resistance at $55, but closed just below this level at
$54.80.  The reason behind our bullish call on ITG is the fact
that the brokers are ITG's largest clients.  If the market is
correct in assuming that the brokerage business is going to heat
up, then more brokers should be increasingly willing and able to
invest in ITG's automated trading services.   Turning to ITG's
chart, the stock has formed a small flag formation after just
breaking out of its triangle formation last week.  The upper part
of the flag sits at $55 and marks the pivot point for our play.
The flagpole was formed with last Tuesday's and last Wednesday's
strong gains.  If ITG can break above $55, judging by the height
of the flagpole, ITG's next target is at least $58.39.  For this
reason, traders should wait for a break above $55 on volume that
puts ITG on track to do at least 200,000 for the day before
initiating a new play.

Picked on May 16th @ $54.52
Change since picked +0.32
Stop Loss @ $51.40


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