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Yahoo, E*Trade Cap A Good Day

Yahoo and E*Trade rose after hours on earnings news, capping a strong day for stocks.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 5 to 131, and the Nasdaq surged 56 to 1626. The S&P 500 gained 24 to 1080, and the Dow climbed 188 to 9240. Volume rose to 1.3 billion shares on the NYSE, and 1.85 billion on the Nasdaq. Advancers led 22 to 8 on the NYSE, and 23 to 12 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, Yahoo rose after matching estimates and guiding forward estimates lower. E*Trade rose after beating estimates and raising guidance. And McAfee and Silicon Storage also rose on earnings news.

During the day, traders were at a loss to explain the reason for the rally. Some cited the success of attacks against Afghanistan targets, while others said one large institution was shifting assets from bond into stocks.

Even Motorola managed to rise 19 cents, to 16.91, despite a dismal earnings report and outlook.

Lam Research rose 1.21 to 17.85 after beating estimates largely on a tax gain. Rational rose 2.62 to 14.05 despite missing estimates. Avaya , off .55 to 10.15, warned. Kemet rose .82 to 17.10 after reaffirming guidance.

Nokia soared 1.93 to 18.93 after releasing a new model similar to the Blackberry made by Research in Motion , which slipped .04 to 14.94.

EMC , off .49 to 12.26, continued to come under pressure over earnings concerns, as did IBM , which managed to gain .11 to 97.25.

VerticalNet surged .28 to .97 after reaffirming guidance.

Microsoft shook off European antitrust worries to rise .95 to 55.51.

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

Nice participation from the most economically sensitive sectors today. The semiconductors, Transports, bank stocks and cyclicals all posted strong gains, necessary ingredients for the health of any rally. The Dow set a new high for this cycle, and the S&P 500 and Nasdaq would do so on moves above 1084 and 1641, respectively. If the S&P and Nasdaq can join the Dow in a breakout, another leg up would become likely, potentially as high as 9600 on the Dow. The big obstacle remains the same as last week, when the market topped out at just about the same level: the indexes are overbought, and tomorrow through Monday is a cycle turn window, potentially a powerful one. The one negative here is that all the bearish rising wedges that were broken recently remain broken; that more than anything keeps us cautious on the market here. The S&P (first chart) climbed along that broken support today. It would take a gap up above 1085 in the morning to get back inside that pattern. 1052 is the first significant support. The Dow (second chart) didn't even come close to broken support today. A move up to about 9350 on the open would do that, and 9000-9050 is now critical support. The Nasdaq (third chart) formed a bullish engulfing candlestick today; a higher close and another white candlestick tomorrow would confirm the new leg up. Resistance is 1641 and 1670, and 1600 is first support.

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