The SplitTrader.com Newsletter        Wednesday 12/13/00 1 of 1
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In This Newsletter:
===================

Market Commentary - The End of Purgatory
Definition of the Day
Wednesday's Split Announcements - USPH, SANM
Thursday's Expirations
Thursday's Play-of-the-Day - MO

================================================================


Market Commentary
=================

The End of Purgatory

Say good-bye, Al, because it's all over.  After a month of
mind-numbing legal wrangling and endless cable-television
banter about butterfly ballots, chads and voter intention,
George W. Bush will become the 43rd President of the United
States, meaning nothing has changed from November 7.

The end for Gore & Co. came late Tuesday after a majority of
the U.S. Supreme Court ruled for the second time this election
that the manual recounts the Democrats sought in Florida
lacked sufficient standards to protect voters' rights.

Expect the Veep to officially throw in the towel later
tonight.

Initial market reaction to the prospect of someone actually
residing in the White House next year was bullish, both the
Nasdaq Composite Index (COMPX) and the Dow Jones Industrial
Average (INDU) gapped significantly higher at the open.  But
as trading continued, both market barometers drifted lower,
with the COMPX eventually drifting into negative territory.

After opening at 2,996.57, a 65-point premium to Tuesday's
close of 2,931.77, the tech-heavy COMPX spiked to its intra-
day high of 3,001.72 minutes later.  From there, it was all
down hill, as traders began to sell the news of the
presidential election and ponder the future of the index's
computer-related issues after NYSE-based Compaq Computer (CPQ)
became the latest PC maker to forewarn of a business slowdown.

After the close on Tuesday, Compaq reported that it expects
fourth-quarter earnings of $0.28 to $0.30 per share versus the
First Call consensus estimate for $0.36 per share.
Additionally, the company cut its revenue estimates to $11.2
billion, 10 percent below expectations.  Though the earnings
earning wasn't unexpected, it still lopped 12 percent off
Compaq's market value.  For the day, the world's largest PC
maker lost $2.67 to $18.10.

Also falling on the day were those companies that supply the
PC sector with its heart and soul, namely the software and
chip makers.  Microsoft (MSFT) dropped $1.13 to $57.25 while
Intel (INTC) lost $1.00 to $35.50.

Also trading lower were those companies that get Internet
content to the PC.  Sun Microsystems (SUNW) dropped another
$2.13 to close at $31.75, continuing a slide that has seen the
networking computing company drop $15 in five days.  Sun is
now trading at October 1999 levels.  Meanwhile, Internet data
switcher Cisco Systems (CSCO) tanked $3.25 to $51.13.

All in all, big-cap selling pressure on the COMPX forced the
index down 109.00 points, or 3.72 percent, to 2,822.77 on
volume of 2.0 billion shares, which was in line with the
average trading volume this month.

Over in the Old Economy, the mood was more upbeat.  The Dow
Jones Industrial Average (INDU) opened up five points higher
at the open and then spiked up another 140 points within the
first 10 minutes of trading to its intra-day high of
10,915.40.  From there, though, the INDU meandered lower most
of the day, trading between 10,800 and 10,850, before selling
off in the final 30 minutes of trading to close at 10,794.44,
up 26.17 points, or 0.24 percent for the day.

Lifting the INDU higher were three components most likely to
benefit from George W's victory. Tobacco purveyor (and current
Splittrader momentum play) Philip Morris (MO) added $1.94 to
close at $40.81, a level not seen since May 1999.  If big MO
can move higher to break resistance at $43, it could be in for
a big move to the next resistance level at $55.

Also helping the cause were pharmaceutical giants Merck & Co.
(MRK) and Johnson & Johnson (JNJ).  Merck, which is a
Splittrader split candidate play, moved higher $0.63 to
$92.00.  Merck appears to be consolidating at $92, which could
position the stock for a break to higher levels.  As for
Johnson & Johnson, it moved up $1.69 to $98.69.  JNJ could be
another split candidate worth watching if it can break through
immediate resistance at $100 and then move on to challenge the
November 1999 highs of $105.

Chart of Johnson and Johnson:



Limiting today's gains on the INDU were IBM (IBM) and Hewlett-
Packard (HWP).  IBM lost $2.63 to close at $91.25, while
Hewlett-Packard dumped $2.06 to close at $33.19.

Even though I said the tobacco sector could be a big winner
with Bush's victory, the fact is, it's already been a big
winner.  Since April, tobacco stocks have been smoking (pun
intended). Over the past eight months, Philip Morris has moved
from $19 to over $40, R.J. Reynolds (RJR) has advanced $15 to
$45, Loews (LTR) has gone from $40 to $94, Universal Corp
(UVV) has shot from $15 to $32, and US Tobacco has gone from
$15 to $25.  With such a strong advance, it's difficult to say
how much upside is left in these issues.

Another recent winner has been Lucent Technologies (LU).  The
beleaguered telecom equipment provider has seen its shares
tumble from $83.75 in December 1999 to $14.31 last week.
However, this week the stock has gained nearly $5.00 to close
Wednesday at $19.94.  Few stocks portray the potential
pitfalls of value investing as clearly as Lucent.  At $40 a
share, the company's stock appeared to be a legitimate value
play.  However, little did most analysts know that the stock
would lose an additional 63 percent.  The moral of the Lucent
saga is, if you want to be a value investor, you'd better be
darn sure you are getting in close to the absolute bottom.

In after-hours news, Sanmina Corp. (SANM) declared a two-for-
one stock split. The electronic contracting manufacturer
closed at $73.77, down $11.31, but traded at $75.38 in after-
hours trading.  Business software supplier Verity, Inc. (VRTY)
also made noise this evening by reporting earnings of $0.23
per share compared to the $0.20 expected by First Call.
Verity closed regular trading down $0.56 to $18.56, but traded
at $20.50 after in after hours.

On the economic front, today's data lent additional credence
to the belief that the Federal Reserve's next action could be
to lower interest rates.  The U.S. Commerce Department
reported before the opening bell that retail sales tumbled 0.4
percent in November, significantly lower than economists'
forecast for a 0.2 percent rise.  Overall, consumer demand
continues to wane, with personal spending at its weakest point
in 18 months in the fourth quarter.

The markets will now look to Thursday's report on the Producer
Price Index (PPI) and Friday Consumer Price Index (CPI) for
direction.  The consensus is for both to have risen 0.2
percent for November.

If both the PPI and CPI only come close to what's expected,
I'm not sure if that will be enough to move the markets.
What's more, I'm not sure if the official pronouncement of
George W. Bush as President will move the markets, as much of
this event is already priced into stocks.  The fact is, the
COMPX has run into stubborn resistance at 3,000, and I think
it might take more than a declaration of the obvious to move
through that level.  However, if the COMPX can bust through
3,000 and hold the gain, a move to 3,200 is entirely
plausible.

Chart of the NASDAQ Composite:



As for the INDU, it's been trading in an ever-constricting
range this week.  The average has not been able to clear
10,850.  On the other side, though, it appears to have
immediate support at 10,750.  For the INDU to break free, it
still needs to advance on interest rate and presidential news.
I'm not sure if that news hasn't already been fully priced
into the INDU issues.

Chart of the Dow Jones Industrial:



On a more positive note, I do think most of the lousy earnings
warnings have been priced into the market.  As it now stands,
the fourth-quarter earnings growth estimates for companies in
the S&P 500 have dropped to 8.4 percent from a peak of 23.6
percent in the first quarter, according to First Call.  As
recently as October 1, analysts were forecasting fourth-
quarter earnings growth of 15.6 percent.  So, there's not much
of an earnings hurdle for companies to climb anymore.

S.P. Brown
Editor


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Definition of the Day
=====================

Reverse Stock Split

A stock split resulting in a reduction in the number of
outstanding shares.

For the complete definition, please go to:
http://www.splittrader.com/glossary/viewglossary.asp?glossaryid=321



===============================
Wednesday's Split Announcements
===============================

Wednesday, December 13, 2000, Before the Bell

U.S. Physical Therapy, Inc. Announces 2-for-1 Stock Split

Before the opening bell, U.S. Physical Therapy (NASDAQ: USPH)
announced today that its Board of Directors has declared a two-
for-one stock split in the form of a 100 percent stock dividend.
The new shares will be distributed on January 5, 2001 to
shareholders of record as of the close of business on December 27,
2000.

For the complete announcement, please go to:
http://www.splittrader.com/announcements/121300_1.asp

===

Wednesday, December 13, 2000, After the Market

Sanmina Announces 2-for-1 Stock Split

After the closing bell today, Sanmina Corp. (Nasdaq: SANM)
announced its Board of Directors has approved a two-for-one stock
split payable in the form of a 100 percent stock dividend to
shareholders of record on December 18, 2000. Upon completion of
the stock split, the number of shares outstanding will be
approximately 305 million. Certificates reflecting the stock split
will be issued on or about January 8, 2001.

Sanmina's shares finished the day down $11.31 to $73.75.

For the complete announcement, please go to:
http://www.splittrader.com/announcements/121300_2.asp



======================================
Thursday's Expirations by Payable Date
======================================

None


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=====================
SplitTrader.com Plays
=====================

The PLAY LEGEND:

SplitTrader.com 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

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

At the SplitTrader.com 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, December 13, 2000
=============================

MO - Phillip Morris $40.81 +1.94 (+1.18)

Tuesday's Comment:

Consumer product conglomerate Philip Morris sold off on Monday
after hitting a 52-week high last week. On Tuesday, shares of
MO traded to an intra-day high of $39.88 on hopes of a ruling
from the Florida Supreme Court. In election news, the vote
recount in Miami-Dade County was stopped on Saturday morning,
reversing the ruling from Friday evening. In other news, MO
completed its acquisition of Nabisco Holdings (NA) on Monday
and this also weighed on the stock. For now, support is the
10-dma at $38.67 with additional support at $38.25, Tuesday's
intra-day high. There is resistance at Tuesday's intra-day
high of $39.88 and then the 6/10/99 intra-day high of $42.50.
Traders may consider entry points on a bounce off of $38.67 or
a move above $40 on volume greater than 3.5 million shares by
midday. We are keeping our stops at $38 to lock in profits.

Wednesday's Update:

Big Mo hit a new 52-week high on Wednesday after comments out
of the U.S. Supreme court all but confirmed a Bush win.  The
new high came on good volume of more than 143 million shares
(twice the average daily volume for MO).  With comments by
Vice President Gore due out tonight, we will look for a rally
in Phillip Morris tomorrow.  This rally may be short lived,
however, as many "Bush Play" stocks, like Phillip Morris, may
have the win already priced into their current stock prices.
Immediate support for the stock lies at the 10-dma of $38.56
with stronger support coming in at $38.00 (the peaks of its
previous two rally attempts).  The MACD is still positive and
the RSI is indicating that there may be more room to run.
Additional entry points may come on a pullback to today's lows
at $39.19 on lighter volume.  Tobacco stocks in general are
attracting a lot of attention right now so be cognizant of
increased volatility.  Our stop remains at $38 to allow for
the volatility but to guard our profits.

Picked on October 26th @ $36.00
Change since picked +4.81
Stop Loss @ $38.00

Chart = 


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