RealTime IT News

Tech Rally Fades

A strong rally in technology faded on Friday, as strong earnings from eBay and Microsoft failed to carry the rest of the market.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 9 to 421, and the Nasdaq climbed 24 to 2792, 50 points off its high. The S&P 500 slipped 4 to 1343, and the Dow fell 95 to 10,583. Volume rose to 667 million shares on the NYSE, and 1.35 billion on the Nasdaq. Decliners led by 15 to 11 on the NYSE, and 17 to 16 on the Nasdaq. The Michigan consumer confidence survey declined sharply. 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.

eBay surged 4 1/8 to 51 after posting earnings of 9 cents a share, 2 cents better than estimates. Commerce One soared 6 1/16 to 27 3/4 after beating estimates by 2 cents with a 5-cent loss. Revenues rose 1,000%.

Microsoft , up 4 13/16 to 60 5/16, and Nortel , up 2 7/8 to 39 9/16, traded higher after matching estimates. Sun Microsystems fell 4 13/32 to 30 15/32 after coming in light on revenues, and Critical Path plunged 10 5/8 to 9 3/8 after missing estimates by 17 cents with a 16-cent loss.

Inktomi fell 2 3/16 to 15 5/16 after meeting lowered estimates but lowering forward guidance. CMGI fell 1 5/32 to 5 11/16 after warning.

Broadbase Software fell 1 1/2 to 6 despite beating estimates by a penny with a 15-cent loss.

Visual Networks slipped 7/16 to 4 5/8 after missing estimates by 3 cents with a 31-cent loss.

Micromuse surged 7 1/8 to 76 9/16 after the company's 10-cent earnings beat estimates by 2 cents. Emulex rose 7 5/8 to 104 3/4 after beating estimates by a nickel with 23-cent earnings.

Some technical comments on the market: Note: We are now including 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 Nasdaq and Nasdaq 100 broke out of their rising channels today (first and second charts), as we said they might. However, in the process, the indexes are threatening to form the second black candlestick (a close that is lower than the open) on an up day this week. And if they close negative on the day, the indexes will likely form a fairly reliable one-day reversal pattern, and on rising volume to boot. And we continue to be concerned about the weakness in the Dow, which we will get to in a moment. However, we still expect any pullback to be modest, perhaps to the gaps at 2618.55 on the Nasdaq and 2470.72 on the Nasdaq 100, and certainly no lower than 2450 on the Nasdaq, the lower channel boundary. The Nasdaq and Nasdaq 100 have formed smaller, steeper uptrends (the gray lines), which led to the breakouts of the larger channels. If the indexes break down out of those gray channels, that would be a good hint that a correction has begun.

The S&P 500 continues to struggle around its September downtrend line (first chart), which it finally took out yesterday. Note in the second chart that the S&P has only reached the middle of its large channel, which shows how much the S&P is lagging the Nasdaq, weighed down by its old