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RealTime IT News

Bears Routed

Stocks plunged Friday morning on the worst unemployment report in a decade, but then recovered to close sharply higher on hopes for further rate cuts.

The ISDEX http://www.wsrn.com/apps/ISDEX/ surged 8 to 283, and the Nasdaq rose 45 to 2191. The S&P 500 climbed 18 to 1266, and the Dow soared 154 to 10,951. Volume declined to 1.07 billion shares on the NYSE, but edged higher to 2.05 billion on the Nasdaq. Advancers led 20 to 9 on the NYSE, and 22 to 15 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.

The economy lost 225,000 jobs in April, far worse than the small gain analysts expected, and the unemployment rate rose to 4.5%. In a rare move, the White House announced after the report that first quarter GDP will likely be revised downward from the reported 2% growth rate. Stocks initially plummeted on the news, but then turned around shortly before noon and kept climbing the rest of the day.

Cisco surged 1.04 to 19.70 on rumors that the company will announce a stock buyback plan. The company reports results next Tuesday.

Takeover rumors boosted shares of OpenWave , up 3.15 to 39.41, and Lucent , up .45 to 11.15.

i2 , up 1.36 to 23.85, continued to gain on optimism over recent management changes.

Sapient rose 1.66 to 13.90 despite missing estimates by a penny with a 5-cent loss. Razorfish , up .04 to 1.26, beat by a penny with a 7-cent loss. Wind River Systems lost .66 to 25.52 on an earnings warning.

Linux stocks rose on positive comments from IBM . Red Hat rose .66 to 6.39, and VA Linux soared 1.40 to 4.92.

Rambus lost 2.73 to 15.42 after losing a legal battle with Infineon Technologies. Rambus said it will appeal.

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

The bulls just won't take a hint. Despite several potential reversal signs this week, the market still managed to post strong gains on very bad economic news today. We'll see if the market is still feeling ebullient on Monday, another potential turn date (not based on Fibonacci turn dates or cycles or anything remotely sophisticated, but on the appearance of a full moon; they have a surprisingly funny effect on traders. "Sell the full moon, buy the new" is a saying that would have earned you money this year.). The biggest plus of all was the Dow, which closed above its main downtrend line for the first time on a weekly basis (first chart). A close above 11,035 and that higher downtrend line would be downright bullish. However, none of the averages were able to reclaim their uptrend lines broken yesterday (second, third and fourth charts), so we could still get a pullback here into the Fed meeting on May 15. The Nasdaq found support at the 2080-2090 level (2089), as we said it might, so we'll now label that as the first important support. A close above 2252 would be bullish. Important support on the Dow is now that old downtrend line just under 10,900; we'll see if it can hold on any retest. The S&P 500 needs to clear 1300 to break its main downtrend line and turn bullish, and to the downside, 1232-1240 is first support, and 1180-1207 is critical.

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.