Internet and technology stocks began Friday on a strong note, but gave back most of their gains by the close.
The ISDEX gained 11 to 414, and the Nasdaq added 47 to 2645. The S&P 500 gained a quarter of a point to 1315, and the Dow slipped 40 to 10,373. Volume declined to 1.1 billion shares on the NYSE and 2.2 billion on the Nasdaq. Advancers led by 18 to 9 on the NYSE and 24 to 14 on the Nasdaq. The National Association of Purchasing Management survey was below 50 for the fourth straight month, indicating economic contraction. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.
Investors piled back into former leaders. i2 rose 3 to 99 1/2, Juniper
climbed 7 to 131 5/8, Broadcom
rose 7 3/8 to 104 7/8, and Checkpoint
gained 2 3/16 to 104 13/16.
Yahoo slipped 1/8 to 39 1/2 after Prudential lowered its price target from $155 to $90 to reflect market conditions while maintaining its Strong Buy rating.
BroadVision fell 2 1/4 to 20 3/8 on a CS First Boston downgrade based on slowing sequential license growth and product transition.
DoubleClick slipped 11/16 to 13 1/2 on an SG Cowen comment that Internet advertising growth rates may decline from greater than 50% to 5-10%.
Digex surged 3 5/8 to 24 13/16 on rumors that shareholders are trying to break up the merger between beleaguered WorldCom
and Intermedia
, which has a controlling stake in Digex.
NaviSite rose 13/16 to 3 5/16 after parent CMGI
expressed support for the company.
Cisco gained 1 7/16 to 59 5/16 after Bear Stearns and Morgan Stanley Dean Witter said concerns about Cisco returning excess inventory to manufacturers are unfounded.
SonicWall rose 1 7/8 to 18 3/8 on a deal with ALLTEL
.
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Is another rally fading? As we pointed out at noontime, the Nasdaq 100 broke out of a small rising wedge this morning (see chart below), with downside potential to the opening gap at 2500, which the index filled before turning up. However, we’re not so sure that it wasn’t a bigger bear flag that was broken, with downside potential to 2200; that’s purely speculation at this point. We’ll first see how the Nasdaq behaves if it retests yesterday’s 2523 low. We’re still keeping an eye on the Philadelphia Semiconductor Index, which has downside potential to 400 if it cannot get back above 600 and stay there. The index ended unchanged today, which is not a good sign, since the Nasdaq and Nasdaq 100 both gained more than 1%. As we said yesterday, the Nasdaq’s bottom yesterday of 2530 is potentially important, duplicating its 41% descent from 5132-3026 from its second peak at 4289. However, there’s a second way to calculate that “measured bear” move: in points instead of percentage. A 2100-point decline from 4289 would take the index to about 2200. One more reason to watch 2523 carefully on any retest. A higher low would be a plus.
The ISDEX continues to trade below its broken support line; a break of that line at about 460-470 would be a real positive. The index has stro
ng support at 375-400.
The S&P 500 got back above its broken support line at about 1315, but appears to be halted by a secondary line that might be the lower boundary of a broken bear flag. It’s a new month, so the 1994 log trendline will probably be at about 1388. To the downside, we want to hold 1300.
The Dow still looks bearish, despite its positive action the last couple of days, and could be forming a 400-600 point descending triangle. The index closed below 10,380 today, so it must now be considered bearish, with potential downside to 9750-10,000.
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