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Email Version, Section 1, Wednesday 05/30/2001
The Newsletter        Wednesday 05/30/2001 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 | Overseas Worries Sink Tech
Definition of the Day
Wednesday's Split Announcements | XOM
Thursday's Expirations
Thursday's Play-of-the-Day | CIMA

Market Commentary

Overseas Worries Sink Tech

It was another rough day for tech stocks, as one of their former
leaders admitted to troubling trends in Europe and Asia.  Tech in
general had been sprinting higher since April on the premise that
things couldn't get much worse and that a tech recovery would
materialize in the second half of the year.  In addition, stoking
the recent euphoria for tech were the analysts that suggested
investors get in ahead of any recovery.

Well, the only unspoken "given" behind all the optimism was that
Europe and Asia had yet to experience the IT boom like the U.S.
already has and that they were due to start spending money on
things like routers and storage soon.  As it turns out, the pie
charts lied.  Europe and Asia are stuck in a full-blown
information technology recession that doesn't appear to be ending

This fact was brought to the forefront last night when Sun
Microsystems (NASDAQ:SUNW) declared itself unfit to meet its
fourth quarter earnings estimates of $0.06/share.  Instead it
expects earnings to come in closer to $0.02-$0.04/share, largely
due to a lack of orders out of Europe and Asia (the wildcards to
drag us out of this thing).

It was not surprising, therefore, that tech stocks opened lower
out of the gate and headed lower all day.  SUNW finished down
$2.42, or 12.96%, to $16.25.  Other networking stocks followed
suit with Compaq (NYSE:CPQ) loosing $0.76 to $15.70, IBM
(NYSE:IBM) down $2.62 to $112.65 and Hewlett-Packard (NYSE:HWP)
off $1.38 to $28.83.

Today's Markets

It was all about tech today, although traders didn't seem too
picky about what they sold.  The moves on the indices weren't
quite elevator shaft material, but they did manage to do
significant technical damage to the recent run up nonetheless.

The NASDAQ (COMPX) lost 91.04, or 4.18% to 2084.50 on volume of
1.9 billion shares traded.  Today's move just about wipes out all
of May's gains and puts us in a perilous technical position.  If
support at 2000 is broken then it's back to the April lows.  As a
chartist, I can see this happening but as a trader I can't.  I
just don't get the feeling that we will retrace all the way back
to 1619 on the NASDAQ.  To this end, two things that the bulls
still have going for them is the fact that the Fed has more
bullets in its holster and the consumer is still strong.

The DOW (INDU) gave up 166.50, or 1.51% to close at 10,872.64 on
volume of 1.1 billion shares.  This close is technically
significant since we broke the psychologically important 11,000
support level.  Provided that investors regain their cool, there
is a lot of congestion on the DOW chart around the 10,500-level
that should hold up as support through the summer doldrums.

Turning to the broader market, the S&P 500 (SPX.X) lost 19.85, or
1.57%, to 1248.08.  The fact that this market barometer also lost
a key support level is confirmation that the sell off has been
far reaching.

Stocks and Sectors on the Move

Along with SUNW and the networking stocks, the telecom equipment
makers headed south today thanks to a Morgan Stanley Dean Witter
downgrade of four key players within the group.  JDS Uniphase
(NASDAQ:JDSU), Tellabs (NAASDAQ:TLAB), Sycamore Networks
(NASDAQ:SCMR) and Nortel Networks (NYSE:NT) were all cut from an
"outperform" to a "neutral" on the basis of a slower than
expected recovery.  The stocks finished down $2.23, $3.45, $1.24
and $1.27 respectively.

Morgan did not stop there, however.  The brokerage firm put the
semiconductor stocks back in their place by lowering estimates on
six chip stocks, citing the old high inventory excuse.  Morgan
also reiterated that they feel the chips will come under
continued selling pressures due to the upcoming pre-announcement
season.  The PHLX Semiconductor Index (SOX.X) lost 37.64 to close
at 585.61.

Investors couldn't even feel safe hiding in defensive healthcare
issues today.  During regular hours shares of Pacificare Health
Systems (NASDAQ:PHSY) were halted on news.  After the bell the
healthcare services company announced that full-year earnings
would be between $1.65 and $1.75/share instead of expected
profits of $2.45/share.  The company blamed higher than expected
costs from its California operations for the shortfall.  PHSY
closed down $0.51 to $18.50 and was trading around $16.50 in the
after hours session.

Looking Forward, Always Forward

We get our weekly read on the employment situation when the
initial jobless claims report comes out tomorrow morning before
the bell.  Analysts are expecting a slight rise to 408,000.  This
report will likely take a backseat to the hullabaloo that is
currently shaking up the tech sector, but an out of whack reading
could make for a choppy morning.

Turning to a chart of the NASDAQ, it is easy to see that the
current uptrend is in danger of seriously falling apart.

Chart of the NASDAQ Composite:

I think that after we get more preannouncements out of the way
that we will trade sideways for a while (maybe a few months)
until the analysts come out of the woodwork with upgrades a
blazing.  Remember that companies are still in simmer mode after
all the rate cuts and won't come to a full boil until the cuts
have a chance to take hold (probably after this summer).  So
choppy trading on lighter volume will probably be the theme of
the next few months, as traders head on vacations and economic
data, news and preannouncements serve to exaggerate intraday
moves.  This can be a trying time for traders, but it can also be
a profitable time, provided you are patient and stick to your own
trading rules.

Craig Seidler

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Definition of the Day

Relative Strength

How a stock performs in relation to its peers, or against the
broader markets. This is used to gauge the strength of an issue.

For the complete definition, please go to:

Wednesday's Split Announcements

Wednesday, May 30, 2001, During the Market

SplitTrader predicts Exxon Mobile announcement

During morning trading, the Board of Directors of Exxon Mobil
Corporation (NYSE:XOM) declared a 2-for-1 stock split and an
additional cash dividend for shareholders of record as of June
20, 2001. The payable date for the stock split is set for July
18, 2001. The decision was first released at the Company's annual
shareholder meeting held earlier this morning.

For the complete announcement, please go to:

Thursday's Expirations by Payable Date
Trading Split-Adjusted June 1, 2001

Quest diagnostics (DGX) splits 2:1
BJ Services (BJS) splits 2:1

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===================== 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.

Thursday's Play-of-the-Day

Wednesday, May 30, 2001

CIMA - Cima Labs $76.70 -0.25 (+1.90)

Tuesday's Comment:

Cima Labs has been steadily forging ahead since 4/27/01, when it
announced the U.S. launch by AstraZeneca (NYSE:AZN) of its Zomig-
ZMT orally disintegrating migraine headache compound. Cima
specializes in producing products for pharmaceutical companies
that are based upon its OralSolv and Durasolv drug delivery
systems. This enables patients to ingest drugs through fast
dissolving technologies without the use of water and without any
adverse tastes. Turning to CIMA's chart, we see that the stock
has just broken out of a seven-month base pattern. Today's strong
advance was a new closing high for the stock and judging by the
width of CIMA's base, the price target on CIMA becomes $107.
Traders wishing to initiate positions in CIMA could look to do so
on an advance above today's high of $75.35 on volume of at least
300,000 shares. We need volume to come in strong to confirm
CIMA's strength. Speaking of volume, we issue one caveat
regarding CIMA: volume can be weak at times, which adds to the
biotech stock's volatility. Therefore, this is an aggressive play
that might call for half positions. Our initial stops are set at
$67.95 to protect against a turnaround.

Wednesday's Update:

Shares of CIMA largely avoided Wednesday's market downdraft.  In
addition, big block trades continue to trade intraday in CIMA
without serving to knock the stock lower.  This is a dead
giveaway that institutions are accumulating the stock and that
they are paying up for shares on the ask.  We will watch for
support at the 10-dma of $73.93 to continue providing a crutch
for the stock and for the MACD to remain positive going into the
latter part of this week.  Traders looking to initiate a position
in CIMA could aim to do so on a break above the previous high of
$77.90 on volume that puts the stock on track to do 300,000
shares for the day.  Our stops remain at $67.95 to keep our
downside risk manageable.

Picked on May 29th @ $76.95
Change Since Picked -0.25
Stop Loss @ $67.95


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