RealTime IT News

Blue Chips Lead The Way Higher

Blue chip stocks led the way higher on Monday, as traders awaited a Capitol Hill appearance by Fed Chairman Alan Greenspan on Tuesday. Technology and Internet stocks broke a three-day losing streak.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 7 to 352, and the Nasdaq climbed 18 to 2489. The S&P 500 rose 15 to 1330, and the Dow surged 165 to 10,946. Volume declined to 1.01 billion shares on the NYSE, and 1.75 billion on the Nasdaq. Advancers led 19 to 11 on the NYSE, and 20 to 17 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.

Shares of still-halted Critical Path changed hands on some electronic communication networks (ECNs) at more than $11 a share, double where it had been trading, after Frost Securities said the company's accounting irregularities may not be as severe as feared, and may only include the fourth quarter. However, it is not clear when the stock will be reopened for trading, or what the price will be when it finally does.

An earnings warning from Emulex , which plunged 37 1/2 to 40, weighed on storage and infrastructure stocks. EMC lost 2.24 to 54.16 on rumors of a weak January, Brocade fell 12 3/16 to 62, and QLogic plunged 15 5/16 to 55 1/16. Network Appliance fared better, rising 1 to 39. Traders believe the company may be stealing business from others in the space.

Juniper slipped 4 1/16 to 79 13/16, Sonus lost 4 1/2 to 34 3/4, and Ciena fell 6 5/8 to 73 1/4.

Inktomi rose 1 11/16 to 14 9/16 on a deal with Reuters.

Liberate dropped 1 15/16 to 12 3/8 on a Deutsche Bank Alex. Brown downgrade on concerns about deployment delays.

Amazon.com added 1 1/8 to 14 1/2 after Merrill Lynch and CS First Boston came to the stock's defense. Merrill analyst Henry Blodget said he expects the company to have $850 million in cash to pay year-end bills.

BroadVision lost 7/32 to 10 31/32 after CS First Boston cut estimates after channel checks revealed a slow start to the quarter.

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 (first chart) found support at its 1990 logarithmic trendline this morning, a line where the Fed has defended the market in the past. It would be a real plus for the bulls if the index can hold that line, and a real negative if it can't. To the upside, the Nasdaq needs to get back above its logarithmic downtrend line from September at about 2550 (second chart). A quick word on fundamentals: one point where fundamental analysis approaches the predictive value of technical analysis is in the measure of a stock's historical trading range. One approach we are fond of was outlined in Ken Lee's book "Trouncing The Dow." A year ago, that approach labeled Cisco Systems a sell at about $72, meaning that was as high as the stock could reasonably trade given its earnings and growth rate. So where does that system rate Cisco a buy? At 25 1/4, or about 14% down from here. It doesn't mean that Cisco can't exceed that price to the downside, just as it exceeded its upsi