AOL, Time Warner Merger Approved

The Federal Trade Commission gave the green light Thursday to the merger of America Online and Time Warner, the largest merger in U.S. history. But the market traded lower again on earnings concerns.

The ISDEX fell 12 to 462, and the Nasdaq lost 43 to 2779. The S&P 500 declined 11 to 1349, and the Dow dropped 109 to 10,685. Volume declined to 479 million shares on the NYSE and 813 million on the Nasdaq. Decliners led by 16 to 10 on the NYSE and 23 to 11 on the Nasdaq. Oracle reports earnings tonight. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

AOL rose .95 to 49.40 after the FTC approved the merger with Time Warner in a little more than an hour. Earthlink , which will gain access to the combined company’s broadband network under the deal, rose 21/32 to 8 1/16.

Intermedia Communications plummeted 4 3/4 to 7 1/2 after a judge did not stop the company’s merger with WorldCom , but said a waiver allowing WorldCom to purchase ICIX subsidiary Digex could open the company to damages from DIGX shareholders, who had sued to stop the merger.

Corning slipped 13/16 to 71 11/16 despite saying that earnings will be at the high end of estimates. Nortel rose 1 7/8 to 38 5/16 after reaffirming estimates.

Cisco , up 11/16 to 51 13/16, announced yet another acquisition, of privately-held CDMA wireless network developer ExiO Communications for $155 million.

C-bridge Internet , down 3/16 to 3 5/8, and Organic , off 1/8 to 1 1/32, issued earnings warnings.

MarchFirst rose 9/32 to 1 29/32 on a $150 million investment from private equity firm Francisco Partners.

BroadVision slipped 5/16 to 21 3/4 on an ABN Amro downgrade on pricing pressure concerns.

Visual Networks rose 27/32 to 2 7/8 after Sprint announced the expansion of a service based on the company’s technology.

Amazon.com slipped 5/16 to 23 7/16 on Prudential comments about the Amazon/Toysrus.com venture having a greater out-of-stock position than any other online retailer.

Openwave gained 1 7/16 to 56 13/16 on a Salomon Smith Barney Top Pick rating.

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, Nasdaq 100, S&P 500 and S&P 100 are all trying to form complex inverse head-and-shoulders bottoms (see the following four charts). So while the Nasdaq 100 breached the neckline of its inverted head-and-shoulders bottom yesterday, the general market picture still looks very positive to us. There are two sets of gaps that could be filled before we turn up (see arrows); the first set was filled today, and the second set would be filled at 1325/700 on the S&P indexes, and 2615/2554 on the Nasdaq indexes. A close above the 3050 level on the Nasdaq and Nasdaq 100, and above 1380 on the S&P 500, should just about complete the bottom. Oracle’s earnings are tonight, and they haven’t been well-received the last two quarters. We should note that a harder-than-expected landing for the economy could lead to renewed selling next year, and we still have a few weeks of earnings warning

season to get through.

The ISDEX also fell back into its inverted head-and-shoulders pattern yesterday, but should hold also hold its recent lows if it gets that far. The index would fill gaps at 449 and 406.

The Dow broke its ascending triangle today, but could be forming a rectangle as long as its holds 10,600, with upside potential to about 11,200. A clean break of 10,900 would be a good sign, while a break of 10,600 would be a negative.

Special report: For a free introduction to technical chart patterns and an overview of this year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.

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