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RealTime IT News

Blue Chips Gain, But Techs Lag

Blue chip stocks led the market higher on Wednesday, but tech stocks were overlooked as mutual funds began their quarter-end window dressing.

The ISDEX http://www.wsrn.com/apps/ISDEX/ was up a fraction to 158, and the Nasdaq gained 11 to 1826. The S&P 500 added 6 to 1144, and the Dow climbed 73 to 10,426. Volume declined to 1.17 billion shares on the NYSE, and 1.61 billion on the Nasdaq. Advancers led 21 to 10 on the NYSE, and 19 to 15 on the Nasdaq.

After the close, Juniper and Sonus warned.

During the day, Manugistics surged 12% on better than expected results.

Adaptec gained 11% on a deal with IBM .

Qualcomm fell 5% on concern about CDMA growth in China.

Parametric fell 17% on a warning.

Storage stocks were strong after Merrill Lynch reinitiated coverage of the sector. QLogic , Network Appliance , Emulex , Brocade and Adaptec received Buy ratings.

Amazon fell 4% after Lehman analyst Holly Becker said the stock is 10%-30% overvalued.

And finally, Bernstein analyst Paul Sagawa's call on the telecom sector earlier this week was an interesting one. The stocks most likely to benefit from a coming rebound? Lucent , WorldCom and Qwest , according to Sagawa.

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.

If we tighten up that lower trendline on the Nasdaq (first chart), we get a bullish falling wedge here, with support right in that critical 1793-1805 area. A break above 1840-1845 would look pretty bullish. That said, there is nothing more bearish than a falling wedge that breaks to the downside, but given the bullish seasonal characteristics just around the corner, a rally soon is probably the most likely scenario. The next two days in particular could be good ones: tomorrow is the end of the quarter and the month and the day before a market holiday, and next Monday is the first of the month, all of which result in more up days than down ones. However, as we've pointed out the last few days, quarterly rebalancing from stocks into bonds and Japanese banks marking-to-market could put some pressure on stocks tomorrow. Hence the mixed picture for the market the last couple of days. The Dow (second chart) has support at 10,400, 10,350, 10,300, and critical support at 10,275, and resistance at 10,450, 10,475, 10,500 and 10,550. The S&P (third chart) has support at 1138-1142 and 1131, and resistance is 1147-1148, 1152, 1155 and 1160.

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