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Yahoo, DoubleClick Lead 'Net Rally

There's a headline you haven't seen in a while. Yahoo and DoubleClick surged Monday on an analyst's comment that the online ad market may be bottoming.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 7 to 230, and the Nasdaq added 16 to 2050. The S&P 500 slipped 6 to 1218, and the Dow dropped 100 to 10,504. Volume declined to 1 billion shares on the NYSE, and 1.4 billion on the Nasdaq. Decliners led 17 to 13 on the NYSE, but advancers led by 8 issues 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 bell, Applied Micro fell a point after warning of a 4-6 cent loss; analysts expected a breakeven quarter. The company said that "Current business conditions continue to be very poor. New order activity has remained weak throughout the quarter and our overall backlog has declined. The magnitude of this downturn is greater than we, or our customers anticipated, and the progress in reducing excess inventory in the channel appears to be slower than they originally thought."

During the day, Yahoo surged 2.34 to 19.65 and DoubleClick rose 1.52 to 13.61 on comments by USB Piper Jaffray that the online advertising market appears to be bottoming.

Palm rose .65 to 5.23 on rumors of an alliance with Intel .

Sierra Wireless plunged 5.65 to 13.75 on an earnings warning.

GlobeSpan surged 1.90 to 11.90 on a Morgan Stanley Strong Buy rating.

Level 3 lost .50 to 4.75 on a Wall Street Journal report that the company could be one of many telecom companies forced to write down impaired assets, which could violate the company's bank credit agreements.

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

We're going to focus on the Nasdaq 100 and the S&P 100 today (first two charts), because those seem to be the indexes where the real battle is going on. Both twice last week were rejected at the necklines of broken head-and-shoulders tops, at 1770 on the Nasdaq 100 and 642 on the Nasdaq 100. Coupled with the Dow's break of 10,560 support today (third chart), these are all signs that the battle may be resolved to the downside. 10,450 is next support, and then 10,300. The only good news is that sell-offs have been coming on declining volume; the Fed decision on Wednesday will likely boost volume and determine direction. We are also entering a significant turn window the next couple of days. We will continue to use the Nasdaq and S&P 500 for significant levels, since they are the clearest. The Nasdaq (fourth chart) faces first resistance at 2077, key resistance is 2125, and 1973 is critical support. The S&P 500 (fifth chart) faces a whole lot of resistance at 1250-1260; a break above that level would be a big plus. 1200 is key support.

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.