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Stocks Meander In Quiet Trading

The stock market took a breather Thursday morning to digest strong recent gains.

The ISDEX gained 6 to 809, and the Nasdaq rose 22 to 4033. The S&P 500 added 2 to 1507, and the Dow rose 15 to 11,159. Volume declined to 375 million shares on the NYSE, but rose to 705 million on the Nasdaq. Decliners led 13 to 12 on the Big Board, but advancers led 18 to 16 on the Nasdaq. July Durable Orders came in much weaker than expected, falling 12.4%. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.

NextLevel Communications lost more than half its value, falling 51 19/64 to 40 1/4 on Merrill Lynch and Lehman Brothers downgrades on concern that partner Qwest may limit VDSL roll-outs. NextLevel supplier Broadcom fell to 256 on the news, but recovered to trade up 61/64 to 270 7/8.

VA Linux Systems beat estimates by a nickel with a 10-cent loss, and W.R. Hambrecht upgraded the stock to Strong Buy. The stock bolted 6 1/2 to 43 5/8. Red Hat rose 2 1/16 to 24 7/8.

Vicinity fell 2 1/16 to 11 15/16 after reporting a loss in line with estimates at 17 cents a share. Bear Stearns and USB Piper Jaffray downgraded the stock.

Verio slipped 1/16 to 59 13/16 after President Clinton approved the company's merger with Japan's NTT at $60 a share.

Amazon.com added 13/16 to 39 5/8 after launching a new car-buying service with Greenlight.com.

WebEx gained 4 7/8 to 39 7/8 on a CIBC World Markets Buy rating and $50 price target. Interland rose 1 3/8 to 8 3/8 on PaineWebber and Bear Stearns Buy ratings.

Homestore.com continued its strong run, up 5 5/16 to 46 3/8 on word that the company's business is running ahead of expectations.

Palm gained 2 1/4 to 40 3/16 on a Goldman Sachs Recommended List rating.

Shares of Akamai continued to slip a day after the company was left out of the Inktomi-led Content Bridge network. The company also faces lock-up concerns.

Some technical comments on the market: This is a quiet day in the market, so we're going to have some fun with the big picture. We've talked about the huge potential moves in the Dow and S&P 500 based on their massive topping patterns, setting up potential moves of 2000 and 200+ points, respectively. Well, the Nasdaq is now setting up a much bigger percentage move of about 2000 points, 50% up or down from here. As of this morning, we have four touches on the Nasdaq's downtrend line, at 5132, 5070, 4289 and now at about 4050. The lower boundary has had only two touches, at 3042 and 3521 earlier this month, but it's enough to give us a pretty clear symmetrical triangle. Based on the high and low points (5132 and 3042), a clean break in either direction could carry the Nasdaq as much as 2000 points in that direction. The upper boundary is 4050 and the lower is 3700, so the Nasdaq has potential upside to 6000 on an upside break or 1700 on a downside break. The apex of the triangle is somewhere in the late September timeframe, so we could be set up for a very interesting month. A triangle that goes all the way to its apex loses a lot of its power, so the break is likely to come sooner. Let's hope for a dearth of earnings warnings next month.

The S&P 500 and the Nasdaq 100 continue to poke their heads out above their downtrend lines, but have yet to do so with much force, while the Nasdaq's rally is staying confined within the downtrend line. More importantly, all three indexes are forming converging boundary lines, or "rising wed



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