RealTime IT News

Stocks Battle Back

Stocks battled back from steep declines Tuesday on earnings warnings from Merrill Lynch and Applied Micro Circuits.

The gains were attributed to optimism - or short covering - ahead of the Federal Reserve's decision on interest rates due out tomorrow afternoon.

The ISDEX http://www.wsrn.com/apps/ISDEX/ finished down fractionally at 230, and the Nasdaq added 13 to 2064. The S&P 500 slipped 1 to 1216, and the Dow dropped 31 to 10,472. Volume rose to 1.2 billion shares on the NYSE, and 1.65 billion on the Nasdaq. Advancers led 17 to 12 on the NYSE, and 20 to 16 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, Palm surged more than 15% after topping estimates by 3 cents with a 16-cent loss and predicting a return to profitability in two quarters.

During the day, consumer confidence and durable orders came in stronger than expected, adding to the belief that the Fed may only cut rates by a quarter point tomorrow. But the signs of economic strength were welcomed.

Two Net stocks extended yesterday's runs to new highs. University of Pheonix Online rose 2.08 to 46.38 on better than expected earnings, and Hotel Reservations Network added .71 to 44.61.

Applied Micro added .53 to 14.73 despite warning of a 4-6 cent loss; analysts expected a breakeven quarter. AMCC's bounce from an early loss emboldened traders.

EarthLink surged 1.64 to 13.91 on a Bloomberg report that the company's software could be bundled with Microsoft Windows XP.

Homestore.com rose .97 to 33.97 on a Prudential Buy rating after strong May home sales.

Oracle climbed .76 to 18.53 ahead of tomorrow's analyst day.

Blue Martini soared .70 to 2.98 on news that the company's alliance with Sun is producing wins with multi-channel retailers.

Aether lost .58 to 7.65 on a revenue warning.

Cisco declined .66 to 17.85 after Lehman Brothers reduced estimates.

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 market bent today but it didn't break. The Nasdaq 100 and the S&P 100 (first two charts) remain below the critical levels of 1770 and 642, but the S&P 100 continues to find support in the 625 range. The Dow (third chart) followed yesterday's break of 10,560 support with a break of 10,450 support, but then recovered to close above that level. 10,300 is next support below that, and 10,560 is first resistance. The rising volume today was not a plus for the NYSE, which finished down. 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, which the index held again today. The Fed decision is tomorrow, and we are in a significant cycle turn window this week.

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.