RealTime IT News

Stocks Edge Higher

Stocks edged higher Friday on a much stronger than expected consumer confidence report.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 3 to 183, and the Nasdaq gained 10 to 1987. The S&P 500 added 3 to 1161, and the Dow climbed 5 to 10,136. Volume was light at 905 million shares on the NYSE, and 1.3 billion on the Nasdaq. Advancers led 20 to 11 on the NYSE, and 21 to 16 on the Nasdaq.

After the close, Oracle announced that it will lay off 1-2% of its workforce.

During the day, Nanometrics plunged 22% on an earnings warning.

Emulex fell 4.5% on a downgrade.

Network Appliance , the top performer in the Nasdaq 100 since the September 21 low, edged higher despite a cautious outlook from Needham.

Equinix , which has doubled in two weeks since being mentioned by the Gilder report (remember those days?), finally slowed down, finishing almost 10% off its intraday high.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

Note: The Market Commentary will return to a daily schedule on January 2. Also on January 2, don't miss our top picks for 2002 at WSRN.com, using a method that returned about 50% in 2000 and 30% so far in 2001. Happy holidays to all, and best wishes for a peaceful and prosperous new year.

A lot of ground to cover tonight. First, a look at close-only plots of the Dow and S&P (first two charts below). Those sure show why 10,175 and 1171 have been very tough resistance, the July-August lows. The Nasdaq (third chart) has cleared similar resistance, and even has a support around 1910 from those July-August closing lows. The Nasdaq (fourth chart) formed a shooting star today, a sign of a potential reversal if Monday follows with a red candlestick down. However, the Nasdaq has been up on every December 31 for the last 30 years, so Monday should be an up day. 1960 is strong support, and the Nasdaq remains in a downtrend until it can clear 2012. One very interesting bit of news: commercial futures traders went long the big Nasdaq futures last week for the first time since September 2000. However, they are still short enough of the mini contracts so that they are still net short the Nasdaq, but it is nonetheless a positive development for tech bulls. Is the Nasdaq 100 tracking stock, the QQQ (fifth chart), forming a head and shoulders top? If that's the case, a move down to 35 would be the minimum expected move. The Dow (sixth chart) and S&P (seventh chart) seem to be forming small rising wedges. Support is 10,092 and 10,040 on the Dow, and 1156-1158 and 1140 on the S&P. Wednesday, January 2 is a potential cycle turn date, and one that could mark the start of a correction. One thing that continues to prop up the market is the Fed, which has printed enough money in the last few months to embarrass the Weimar Republic. The Fed injected a stunning $21 billion into the financial system yesterday, the biggest single-day injection since the days after the September 11 terrorist attacks. While that shows that all is still not well with the financial system, it also acts to prop up the stock market, since at least some of that is likely to make its way into equities via institutional hot money. When that magic wears off is anyone's guess, but the indexes have so far shown no sign of rolling over hard. Finally, ECRI's weekly leading index reached the flatline for the first time since September 2000. An economic bounce may be coming, which could help stocks, at least until it becomes clear that the recovery may be a weak one.

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.