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RealTime IT News

Net Stocks Party Like It's 1999

Net stocks soared more than 7% on Tuesday, and some former leaders gained 40% or more.

The ISDEX http://www.wsrn.com/apps/ISDEX/ soared 20 to 288, and the Nasdaq surged 52 to 2220. The S&P 500 added 1 to 1267, and the Dow slipped 21 to 10,876. Volume soared to 1.57 billion shares on the NYSE, and 2.55 billion on the Nasdaq. Advancers led by a few issues on the NYSE, and by 23 to 14 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

Stocks were buoyed by Morgan Stanley comments that Cisco's core enterprise networking market may be stabilizing, and by Brocade's announcement that it will meet estimates. Cisco surged 2.20 to 20, and Brocade soared 6.98 to 49.94.

Priceline rose .37 to 6.96 after beating estimates by 2 cents with a 3-cent loss. The company said it will return to pro forma operating profitability in the second quarter. The company is up almost 600% off its December 27 low.

Register.com surged 1.50 to 9.08 after blowing out estimates by 10 cents with 4-cent earnings. GoAmerica , up .08 to 4.00, beat estimates by 7 cents with a 34-cent loss. Diamond Cluster , up .39 to 17.64, matched estimates with 19-cent earnings, and KPMG Consulting , up .45 to 16.37, beat estimates by 9 cents with 34-cent earnings. Loudcloud , off 1.03 to 5.40, announced 19% layoffs, and CNET , down .41 to 12.32, missed estimates.

CMGI soared 40% to 5.82, and VerticalNet surged 60% to 3.29.

The day even had a red-hot IPO: Simplex Solutions soared 9.20 to 21.20 on its first day of trading.

Broadcom , up 6.40 to 48.36, and JDS Uniphase , up 1.75 to 23.85, rose on comments that their inventory correction will run its course by the third or fourth quarter.

S1 bolted 1.90 to 8.98 on better than expected results.

Some technical comments on the market: Note: We include charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

Sometimes a set-up in the market is so clear it's almost hard to believe it can work out. This is one of those set-ups. The S&P 500 formed a perfect doji (trading higher and lower during the day, only to close unchanged, a potential reversal sign) at major resistance (first chart). The Dow pulled back at a downtrend line that has marked the start of three previous hard sell-offs in the index (second chart). And the Nasdaq filled the last of a series of gaps created two months ago, right beneath major resistance (third chart). And all of this occurred on a significant cycle turn date. The Nasdaq may have a little strength left in it, but our best guess at this point is that the market trades with a downward bias into the Federal Reserve meeting on May 15. To the upside, the Dow needs to take out its main downtrend line and close above 11,035 to turn bullish. To the downside, critical support is 10,740. The Nasdaq needs to clear the 2252-2300 area to turn bullish, and first support is 2150 and then 1950-2000. The S&P 500 needs to clear 1300 to break its main downtrend line and turn bullish, and a break below 1260 could start a correction. First strong support is 1180-1207. As we've said many times now, it would be bearish for the rally to end here, below the January bottoms and main September downtrend lines on the Nasdaq and S&P 500. One other point in the bears' favor here: commercials are net short in the S&P and Nasdaq futures, while non-commercials are net long, and both by near-record levels. The opposite is more likely to happen at a major bottom, the institutions long and individuals short. The market can't go far without institutional money behind it.

Special report: For a free introduction to technical chart patterns and an overview of last year's action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.