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Email Version, Section 1, Sunday 06/03/2001
The SplitTrader.com Newsletter Sunday 06/03/2001 1 of 2
Copyright 2001, All rights reserved.
Redistribution in any form is strictly prohibited.
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In This Newsletter:
===================
Market Stats
Market Commentary - So Close And Yet So Far
Definition of the Day
Friday's Split Announcements - ARMF
Monday's Expirations
Event Calendar - Next Week's Economic reports
Upcoming Splits for next two weeks
Successful Announcements - Last Week
New Candidates List
Expected/Likely Announcements for the Coming Week
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Market Stats For the Week
=========================
Index Close Change Support Resistance
DJIA 10,990.41 -14.96 10,750.00 11,000.00
Nasdaq 2,149.44 -101.59 2,000.00 2,325.00
S&P 500 1,260.67 -17.22 1,265.00 1,300.00
Russell 2000 501.72 -6.90 485.00 515.00
PHLX Semi 617.61 -37.26 578.00 725.00
Market Commentary
=================
So Close And Yet So Far
The major averages managed to muster up a Friday rally, but they
couldn't quite make it over key resistance levels. With a little
help from the semis and a better than expected Friday employment
report, the market slipped into the summer weekend on a positive
note.
And who knows where we would have ended, given decent volume.
Friday's NYSE volume qualified for the fifth slowest day all
year. Nonetheless, the simple fact that we were able to turn an
iffy open into a bullish close bodes well for next week's action.
It was probably the tame employment report that brought some
sidelined cash back into the market on Friday, setting the table
for what was a mildly encouraging close to a seesaw week.
Nonfarm payroll fell by 19,000 versus consensus expectations for
a drop of 25,000. In addition, the unemployment rate fell to
4.4% versus last month's reading of 4.5%. Separately, April's
employment report, which originally was reported at 223,000, was
revised down to 182,000.
Many economists saw the report as encouraging. On the one hand,
it was still weak enough to keep the odds of another 25-basis
point rate cut high. On the other hand, it shows an improving
employment picture that doesn't support theories of a recession.
Meanwhile, the battered semiconductor index sprang to life on the
heels of a positive announcement out of Novellus Systems
(NASDAQ:NVLS). The chip firm said late Thursday that it was
ready to stand by its $0.40 per share earnings estimate for its
second quarter. In addition, Merrill Lynch upped its rating on
the stock. NVLS closed higher by $2.50, or 5.22%, to $50.40.
Other semiconductor stocks joined NVLS in the plus column.
Altera (NASDAQ:ALTR) added $1.11 to $25.11, Intel (NASDAQ:INTC)
rose $1.73 to $28.74 and Applied Materials (NASDAQ:AMAT) hopped
$1.39 to $51.32.
Software issues also helped prop up the NASDAQ, with Oracle
(NASDAQ:ORCL) and Microsoft (NASDAQ:MSFT) posting gains of 3.66%
and 1.68% respectively. Salomon Smith Barney put out a research
note indicating that it believes that ORCL will hit its number
for the fourth quarter. Question is, where was Solly three days
ago when both these software behemoths were hitting the skids?
Friday's Markets
After an initial dip in the morning, buyers emerged to take the
indices higher into the close.
The NASDAQ (COMPX) finished up 38.95, or 1.85%, to 2149.44. The
tech heavy index gave up some gains last week, finishing lower by
over 100 points. But, technically speaking, the NASDAQ did find
good support at its 40-dma, which we will take as a good sign
going forward.
The DOW (INDU) also set a course for higher ground. The old-
economy index dusted itself off and gained 78.47, or 0.72%, to
close at 10,990.41. Had the institutions been active in the last
hour, we might have seen a more technically significant close
over 11,000. But we'll take what we can get at this point in the
game. NYSE volume came in at a paltry 1 billion shares and new
highs continue to swamp new lows.
Treasurys put on some points in Friday's session, as a weak NAPM
suggested that the manufacturing sector is still roiling in a
recession. This, of course, suggests that further Fed cuts may
still be near, which in turn coaxed some government debt buyers
out of the woodwork. The benchmark 10-year note added 3/32 to
yield 5.375% and the 30-year bond surged 21/32 to yield 5.705%.
Stocks and Sectors on the Move
The stock of the week was most definitely Sun Microsystems
(NASDAQ:SUNW). It spoiled the tech party earlier in the week by
saying that soft European and Asian demand for its products would
cause it to miss earnings estimates. This was the kind of news
that sellers can get behind. And sell they did. The tech
troubles spilled over into old-economy stocks as well, sending
the DOW down through support at 11,000 for the first time since
5/16. However, thanks to Friday's rally, the DOW closed the week
down only 15 points.
Looking back on the week, you could almost feel the market
sentiment shift, as the selling from the prior week spilled over
into Monday's session. This had the short sellers licking their
chops, as visions of another bear market rally started to become
reality. However, no sooner did the pessimists get short than
they had to start thinking about covering. This may have
contributed in part to Thursday and Friday's rallies, although
don't get too complacent because this tug of war is certainly not
over. The shorts will no doubt reemerge at he first sign of
weakness to add to the volatility that we have been living
through for the last two weeks.
Speaking of the shorts, one battle that they have not been able
to win lies within the gaming stocks. These lottery and casino
stocks have been quietly advancing all year and cannot be knocked
down. The only thing that I can figure is that the demand for
these services must be inelastic. Folks are going to open their
wallets and gamble even if they have to put it on a credit card I
guess.
Some interesting gaming equipment stocks that look ready to
breakout to new highs include Anchor Gaming (NASDAQ:SLOT) and
International Game Technologies (NYSE:IGT). The latter actually
broke out on Friday, but still looks like it has plenty of
institutional support to power it higher.
On the casino side, Harrah's (NYSE:HET) and MGM Mirage (NYSE:MGG)
both look ready to pop. They have been tracing cup and handle
formations over the past few months and are now rest at the upper
part of their handles.
The banks, as measured by the S&P Banks Index also look ready to
head higher. Within this sector, even more cup and handle
formations can be found, such as Splittrader split candidate
Fifth Third Bancorp (NASDAQ:FITB). With every report that
confirms that the Fed will continue cutting, the banks become
more compelling. Golden West (NYSE:GDW) is another bank stock
with a bullish chart formation. GDW is just about to breakout of
a bullish ascending triangle that technically speaking, could
take the stock to the $85-$90 level.
Looking Forward, Always Forward
Next week will be fairly light on the economic data. Therefore,
preannouncements will continue to grab the spotlight, making for
continued choppy trade.
Paramount on everyone's mind will be whether or not the DOW and
the NASDAQ can make a push higher to get over key resistance
levels. The 11,000-level on the DOW and the 2300-level on the
NASDAQ remain the bogies for the bulls.
Turning to Splittrader plays, we have tightened up some stops to
lock in some gains and are standing pat as far as new plays go,
in order to getter a better read going into next week.
Get Out There and Enjoy the Great Outdoors
Craig Seidler
Editor
www.SplitTrader.com
Definition of the Day
=====================
Scalping
A type of trade in which a stock may be purchased and sold, or
vice versa, within a matter of seconds or minutes.
For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=446
============================
Friday's Split Announcements
============================
Friday, June 1, 2001, During the Market
Armanino Foods of Distinction announces cash and stock dividend
Armanino Foods of Distinction, Inc. (Nasdaq:ARMF) announced
during regular trading, a 2-for-1 stock split payable in the form
of a 100 percent stock dividend. Qualifying shareholders will
receive additional shares on the payable date of June 25, 2001.
For the complete announcement, please go to:
http://www.splittrader.com/announcements/060301_1.asp
====================================
Monday's Expirations by Payable Date
====================================
Fair, Isaac and Co. (FIC) splits 3:2
Columbia Sportswear (COLM) splits 3:2
Whole Foods Market (WFMI) splits 2:1
==============
Event Calendar
==============
For the week of June 4, 2001
Monday
======
Auto Sales May Forecast: 6.2M Previous: 6.4M
Truck Sales May Forecast: 6.9M Previous: 6.0M
Tuesday
=======
Productivity-Rev Q1 Forecast: -0.7% Previous: -0.1%
Factory Orders Apr Forecast: -2.7% Previous: 1.4%
NAPM Services May Forecast: N/A Previous: 47.1%
Wednesday
=========
None
Thursday
========
Initial Claims 6/2 Forecast: N/A Previous: 419K
Wholesale Inventories Apr Forecast: N/A Previous: 0.1%
Consumer Credit Apr Forecast: $8.6B Previous: $6.1B
Friday
======
None
Week of June 11th
================
Jun 13 Export Prices ex-ag
Jun 13 Import Prices ex-oil
Jun 13 Retail Sales
Jun 13 Retail Sales ex-auto
Jun 14 Initial Claims
Jun 14 PPI
Jun 14 Core PPI
Jun 14 Business Inventories
Jun 15 CPI
Jun 15 Core CPI
Jun 15 Industrial Production
Jun 15 Capacity Utilization
Jun 15 Mich Sentiment-Prel
===============
Upcoming Splits
===============
Symbol Company Name Splits Payable Executable
PKI - PerkinElmer 2:1 06/01/2001 06/04/2001
UHS - Universal Health Services 2:1 06/01/2001 06/04/2001
KNGT - Knight Transportation 3:2 06/01/2001 06/04/2001
CRTQ - Cortech 2:1 06/01/2001 06/04/2001
FIC - Fair, Isaac & Co. 3:2 06/04/2001 06/05/2001
COLM - Columbia Sportswear 3:2 06/04/2001 06/05/2001
WFMI - Whole Foods Market 2:1 06/04/2001 06/05/2001
XTO - Cross Timbers 3:2 06/05/2001 06/06/2001
EQT - Equitable Resources 2:1 06/11/2001 06/12/2001
OKE - ONEOK 2:1 06/11/2001 06/12/2001
APPB - Applebee's 3:2 06/12/2001 06/13/2001
JNJ - Johnson & Johnson 2:1 06/12/2001 06/13/2001
KKD - Krispy Kreme Doughnuts 2:1 06/14/2001 06/15/2001
GNWR - Genesee & Wyoming 3:2 06/15/2001 06/18/2001
IBOC - Int'l. Bancorp 5:4 06/15/2001 06/18/2001
EGBN - Eagle Bancorp 7:5 06/15/2001 06/18/2001
SDS - SunGard Data Systems 2:1 06/18/2001 06/19/2001
DP - Diagnostic Products 2:1 06/18/2001 06/19/2001
SHFL - Shuffle Master 3:2 06/18/2001 06/19/2001
FRED - Fred's 5:4 06/18/2001 06/19/2001
CAKE - Cheesecake Factory 3:2 06/18/2001 06/19/2001
FCEL - FuelCell Energy 2:1 06/19/2001 06/20/2001
ESRX - Express Scripts 2:1 06/22/2001 06/25/2001
=====================================================
Successful Announcement Predictions For The Past Week
=====================================================
Symbol Company Date Announced
=====================================================
XOM Exxon Mobil 05/30
FCEL FuelCell Energy 05/31
================================
NEW SPLIT CANDIDATES LIST
================================
New Split Candidates:
TRR - TRC Companies, Inc. $51.50 (+4.60)
This diversified services company has yet to split its shares,
but due to the fact that it is now trading over $50, we have put
it on our radar. It has plenty of authorized shares for a 2:1.
We will keep an eye on its next BoD meeting since it just
reported earnings in the beginning of May.
===
WGOV - Woodward Governor Company $80.89 (+5.10)
WGOV split 4:1 back in 1998, but has since doubled in price.
With the stock trading around $80 a share, we feel it is time for
a 2:1. WGOV just announced earnings so its next BoD meeting or
earnings in July will be the most likely time for a split
announcement.
==================================================
Expected/Likely Announcements for the Coming Week
==================================================
Date Expected
Symbol Company To Announce
HOC Holly Corporation 06/08
TJX TJX Companies, Inc. 06/05
----------------------------------------------------
TJX - TJX Companies, Inc. $33.50 (-0.39)
TJX last announced a split in 1998 at $44 a share. With the
stock trading at around $33 it's a bit of a wildcard to announce.
Nonetheless it is currently just off yearly highs. The retailer
has its BoD meeting on 06/05, which is when we expect it to
announce.
===
HOC - Holly Corporation $45.15 (+5.22)
HOC last split its shares at about $30 in 1988. Since it is now
trading at around $44, we think it has a good chance of
announcing at it BoD meeting on 06/08.
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