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Stock Gains Cut In Half

Jittery investors cut a strong rally in half on Thursday, as earnings and economic worries continued to weigh on the market.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 7 to 252, and the Nasdaq climbed 25 to 2110. The S&P 500 added 7 to 1255, and the Dow rose 39 to 10,911. Volume dropped to 1.15 billion shares on the NYSE, and 1.81 billion on the Nasdaq. Advancers led 18 to 12 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.

After the close, Novellus rose after saying its quarter is on target, but Altera warned.

Traders awaited Friday morning's unemployment and purchasing management reports. A speech by Dallas Fed President Robert McTeer raised concern that a recovery may still be some time off.

Oracle rose .73 to 15.24 on rumors that a big contract win could help the company make its quarter, which ended today. But analysts expect the company to warn as soon as tomorrow or Monday.

Worldcom , up .37 to 17.91, was rumored to be a takeover candidate of BellSouth . Didn't we tell you the Baby Bells were going to win the telecom war?

i2 managed to gain .01 to 20.15 on news that Manugistics , up 1.20 to 35.85, may win large supply chain contracts from Ford and Nissan. But i2 held its uptrend line at today's low of 19.40 (see chart below and today's Morning Report).

StarMedia surged .81 to 2.82 on investments from BellSouth, Primedia and JPMorgan Partners.

Optical stocks were mixed, as negative comments from analysts continued to roll in. Nortel slipped .02 to 13.33, and JDS Uniphase lost .07 to 16.87. But Sycamore surged 1.15 to 10.14, and Tellabs added .45 to 34.38.

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

Not much of a rally today, which could be a hint of more downside ahead. Given the technical breakdowns yesterday, that wouldn't be too surprising. Tomorrow morning's employment and NAPM reports should dictate short-term direction, although earnings warnings may play a role too. As long as the S&P 500 holds 1200 support and the Nasdaq holds 2000, the market looks okay; below those levels, a retest of the lows becomes likely. The Dow (first chart) turned back below the important 11,000 level. The index has support about every 100 points below that level, and would trade with a negative bias below 10,600. The S&P 500 (second chart) turned back below the important 1265 level, the neckline of a potential inverted head-and-shoulders bottom. The index could find support in the 1218-1242 range. One positive is that the Nasdaq (third chart) appears to be back above its September downtrend line, which is now around 2080-2100. 2052-2060 is the next support below 2080-2100. The Nasdaq 100 (fourth chart) is sitting right above important support at 1740-1760.

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.



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