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Email Version, Section 1, Wednesday 06/13/2001
The Newsletter        Wednesday 06/13/01   1 of 1
Copyright 2001, All rights reserved.
Redistribution in any form is strictly prohibited.

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In This Newsletter:

Market Commentary | Investors Forego Tech For Food
Definition of the Day
Wednesday's Split Announcements | None
Thursday's Expirations
Thursday's Play-of-the-Day | WMI


Market Commentary

Investors Forego Tech For Food

Cell phones, routers and semiconductors took a backseat on
Wednesday to Nabisco cookies, Post cereal and Philly cream
cheese, as the long awaited Kraft Foods IPO hit the street.  With
investors recently shifting their attention back to companies
with actual earnings, Kraft (NYSE:KFT) was a sight for sore eyes.

The Kraft IPO is the biggest initial offering since the AT&T
Wireless (NYSE:AWE) offering in April of 2000.  But unlike the
AWE offering, KFT managed to eke out a slight gain on its first
day of trading.  After trading about 70 million shares, Kraft
ended today's session up $0.25 to $31.50.

However, some analysts were saying that due to the fact that the
"cheese play" was so heavily oversubscribed, it was priced at
close to the top of the range for being reasonably valued.
Therefore, they don't see much upside to the stock from here, at
least in the near term.

In anticipation of the Kraft deal, other food stocks have been
breaking out of bases and setting new highs.  Some of the
technically stronger ones include Suiza Foods (NYSE:SZA), Dean
Foods (NSE:DF) and Smithfield Foods (NYSE:SFD).  In addition to
having strong balance sheets, these food plays are fairly
recession proof.  And with economic data still pointing towards a
continuation of "challenging times", investors have filled their
plates with these food stocks and show no signs of putting the
fork and knife down soon.

Speaking of economic news, we received word on Wednesday that
retail sales for May moved up by 0.1% versus projections of 0.2%.
This came on top of news that April's retail sales were revised
up to 1.4% from 1.1%.  So, it seems that while the consumer has
his moments (he spent like crazy in April), he is still not ready
to open his wallet for big-ticket items or for any length of

Today's Markets

Take yesterday's price action, flip it on its head, and you have
an accurate reading of what happened today.  While yesterday saw
a weak open followed by strong buying in the afternoon (as if
someone fired a gun on cue), today we saw a fairly strong opening
followed by a footrace to exit doors.

The NASDAQ (COMPX) lost 48.29, or 2.23%, to 2121.66.  Volume
picked up a bit, with 1.5 billion shares changing hands.  The
tech heavy index closed under support at 2150, so we are now
looking towards support at 2100 as the next safety net for the

The Dow (INDU) also disappointed investors on Wednesday.  After
flirting with the 11,000-level just before noon, the Dow called
it quits and headed south into the close.  The pullback from
11,000 today reinforces resistance at this psychologically
important level and served to leave a bearish taste in the mouths
of traders everywhere.  Volume on the NYSE came in at just over 1
billion shares and surprisingly (given the lousy session),
decliners and advancers were almost dead even at the close.

Stocks and Sectors on the Move

There were the obligatory warnings today and some individual
movers of note, but in this section today I mostly want to focus
on some sectors and stocks that I have been watching lately.
These are by no means "go out and buy them tomorrow" stocks, but
some of them might pique your interest enough to warrant further
exploration on your part.

But before I get to my watch list, I feel obliged to let you in
on the hot news of the day.  That said, Lucent (NYSE:LU), got
pummeled by 10% after Standard & Poors lowered its rating on its
bonds to "BB-plus" or junk status.  S&P cited significant
uncertainties over whether LU could turn its current situation
around in the face of such a weak telecomm market.  LU ended the
session down $0.70 to $7.24.

Maytag (NYSE:MYG) became the latest in a string of companies to
blame softening sales and a weak economy for their impending
earnings shortfall.  MYG now expects earnings in the neighborhood
of $0.32 per share as opposed to previous estimates of $0.46 per
share.  The stock finished the day at $32.17, down $0.31.

In after hours action, Ingram Micro (NYSE:IM) lowered its second-
quarter earnings bogey and Quantum (NYSE:DSS) also said it will
miss estimates of $0.17 by about $0.07 per share.

Now we turn to the sectors and stocks du jour.  I have been
watching the action in the gambling/casino group for a few weeks
now and am impressed by the staying power of these stocks.  Many
have already broken out of bullish base formations and are
ensconced in well defined up trends.  Any weakness has been
almost immediately met with buying interest, which tells me that
the "generals" don't think that these stocks are a gamble.  My
favorite in the group is little MTR Gaming Group (NASDAQ:MNTG).
It has been moving higher ever since the gaming laws in West
Virginia (where it owns casinos) were changed to allow higher
stakes gambling.  The more a customer can bet, the better it is
for the house.  MNTG closed up $0.70 to $11.90 today.

I have also been intrigued by a select bunch of high tech
stocks that have totally disregarded the recent plight of their
peers.  I am speaking of the computer software sector and more
specifically the educational/game-software sector.  Within this
specialized group, I like Activision (NASDAQ:ATVI).  The stock
has been experiencing huge volume surges on up days and has just
broken out of a loose base formation on more than three times
average trade.  In addition, an analyst at CSFB just moved ATVI's
price target from $35 to $50.  ATVI closed Wednesday's session up
$1.00 to $40.93.

Rapping up my "featured" sectors for today is the insurance
group.  These slow moving stocks have been quietly advancing all
year and a select few are now breaking out of bullish chart
patterns.  My favorite insurer right now is St. Paul (NYSE:SPC),
which just completed a cup and handle breakout.  The stock had
been moving sideways for three weeks on lower volume (textbook)
before breaking up through resistance at $50.75 during today's
session.  Now that SPC has broken $50.75, it does not face
significant resistance again until the $55-level.  The only
"iffy" aspect of today's breakout was the volume.  SPC did only
850,000 shares as opposed to its average 1.1 million.

Take from these what you will.  Good traders know that almost 50%
of a stock's price movement is sector related.  Stick to strong
sectors and you give yourself an edge right off the bat.

Looking Forward, Always Forward

Thursday morning brings with it more information from the
inflation front.  We get May's PPI number (expectations of a 0.3%
reading) and initial jobless claims (looking for a number close
to 424,000).  These are both potentially market moving, so keep
an eye on those early trades.

Looking ahead, while I am still bullish on the market in general,
I have to say that technically speaking, storm clouds are
brewing.  By this I mean that the charts of the NASDAQ and the
Dow (more so the NASDAQ) reveal ugly head and shoulders
formations that are close to breaking down.  A bearish break of
the NASDAQ's neckline at 2100 would have many a chartist heading
for the sidelines for a piece.  On the DOW, a break down through
today's low of 10865 would have the same results.

While we are not saying that a break of these above-mentioned
necklines will result in a total collapse of the market, these
are levels that a lot of pros are looking towards when placing
trades.  And in this slow market, if buyers get spooked anymore
than they already are, it may be time to tighten the stops and
take a step back.

Keep sticking with the strongest sectors and continue going for
singles instead of home runs.  You'll be pleasantly surprised at
how many runners you'll get home.

Craig Seidler

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Definition of the Day

Triple Witching Day

The third Friday in March, June, September and December, when
individual stock options, S&P 100 index options and S&P futures
contracts expire simultaneously.

For the complete definition, please go to:

Wednesday's Split Announcements


Thursday's Expirations by Payable Date

Krispy Kreme Doughnuts (KKD) 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.

Play of the Day (For Thursday)
Wednesday, June 13, 2001

WMI - Waste Management $29.12 +0.62 (+0.68)

Tuesday's Comment:

WMI did a tremendous about face on Tuesday, as shares plummeted
in the early going only to turn on a dime and close higher for
the day. WMI dipped as low as $27.38 before reversing course at
about midday. We were encouraged by the fact that the big block
trades occurred as the stock was heading higher in the afternoon
instead of when the stock was selling off in the morning.
Tuesday's action in WMI might have been the "cleansing" before
the next leg higher for the stock. Any weak shareholders probably
pulled the ripcord today, leaving only strong holders that will
probably not turn into sellers until much higher prices present
themselves. Those who might be thinking about adding WMI to their
portfolios could look to do so on a break through resistance at
$29 on volume of at least 2.5 million shares for the session.

Wednesday's Update:

Waste Management stayed out of the garbage heap on Wednesday,
despite selling pressure from the broader market.  In fact, WMI
managed to breach resistance at $29 on outstanding volume of 4.8
million shares, more than twice its average trade.  This tells us
that momentum players and institutions are scooping up shares of
our pollution control play.  We are also encouraged by the fact
that other pollution control stocks are making new highs.  This
means that this whole sector has become attractive, and with WMI
the clear leader of the group, we think it has more upside
potential.  No substantial resistance should show up until the
$31.25 level, and even that shouldn't pose too much of a problem
since it was established last July.  We also like the fact that
WMI's MACD just issued a buy signal and that volume has clearly
been coming in when the stock has been advancing.  Traders that
might be interested in adding WMI to their portfolios could look
to do so as long as WMI can close above $29 again on Thursday,
accompanied by volume of at least 2.5 million shares.

Picked on June 6th @ $28.51
Change Since Picked +0.61
Stop Loss @ $26.90


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