The Dow closed above 11,000 on Friday for the first time since April, but Internet stocks were left behind on concern over Internet Capital Group’s earnings.
The ISDEX finished up half a point to 727, and the Nasdaq gained 29 to 3789, more than 100 points off its low. The S&P 500 rose 11 to 1471, while the Dow soared 119 to 11,027. Volume declined to 839 million shares on the NYSE and 1.3 billion on the Nasdaq. Advancers led 19 to 8 on the NYSE and 21 to 17 on the Nasdaq. The Producer Price Index came in unchanged, in line with expectations, but retail sales were stronger than expected. For earnings reports, visit our earnings calendar and reported earnings.
B2B incubator Internet Capital Group reported a second quarter loss of 70 cents a share, wider than the 6-cent a share loss in the year-ago quarter. Revenues rose nearly 600% to $453 million. No analyst estimates were available. The stock lost 1 1/8 to 30 1/2 on concerns over cash burn and IPO weakness. Banc of America lowered estimates on the company, but Dain Rauscher Wessels initiated coverage with a Buy Aggressive rating. Dain Rauscher also began coverage of i2
with a Strong Buy Aggressive, and Commerce One
with a Buy Aggressive. ITWO rose 2 11/16 to 146 15/16, but ran into resistance just under 150, and Commerce One rose 2 1/16 to 50 9/16, but below 52-53 resistance.
Dell Computer was a drag on the Nasdaq after missing its whisper number and reporting lighter-then-expected revenues. The stock fell 3 15/16 to 37 13/16. dell.com accounted for half of total sales.
Net2Phone gained 4 3/4 to 30 3/4 on news of a $1.4 billion investment from AT&T, which purchased a 32% stake. Clarent
gained 6 1/2 to 45 3/4 on rumors of an investment from Microsoft
and news that its merger with ACT Networks
will go through.
Blue Martini fell 5 9/64 to 61 after reporting a second-quarter loss of 23 cents a share. No estimates were available. Telescan
lost 1 1/32 to 5 after missing estimates by 17 cents with a 15-cent loss.
Verio gained 1 9/16 to 58 3/4 on news that the FBI has resolved security concerns over the company’s merger with Japan’s NTT.
Datalink.net , one of the best-performing Net stocks this year, rose 2 1/4 to 18 on news that it will move to the Nasdaq on Monday and begin trading under the symbol XLNK.
Xcelera.com gained 1 1/8 to 13 on news of a special dividend.
Sonus Networks rose to 215 before falling back, finishing down 1 to 197 1/2, on positive comments from Prudential and a $240 price target.
eGain Communications gained 9/32 to 8 1/8 after beating estimates by 3 cents with a 61-cent loss.
The IPO of Equinix priced at 12, opened at 12 3/4 and closed at 13 3/16.
Some technical comments on the market: We said yesterday that we were hopeful this pullback could be mild, and that seems to be the case. The Nasdaq found support this morning around its first major support at 3700. However, once it broke into positive territory, the index didn’t gain much ground. The Nasdaq appears to be stuck in a large trading range between 3500 and 4289, and has yet to establish firm direction either way. The Fibonacci levels speak volumes here: the rally from 3042 to 4289 stopped just short of the 62% retracement level (4337) of the index’s big April to May decline; we then retraced 62% of that move to 3521, retraced up 50% to 3936, and back down 62% to 3686. Not once have we cleared the 62% number necessary for a move to become a trend in its own right. The big positive tod
ay is that the Dow is back above 11,000. However, the move came on low volume, and the index is right at the upper boundary of its bearish diamond pattern: a scenario more likely to fail than to succeed. We’ll wait for the weekly charts to update over the weekend to judge whether we have a low-volume breakout here; our preliminary judgment is that the boundary may have held. The Dow has strong support at 10,900. We still have some negative patterns in the background here: the S&P, Nasdaq and the ISDEX completed only about half of their predicted down moves out of bearish rising wedges recently. However, as we’ve said, the markets do not look like they are set up for large further declines here; we may have another week or more of a relatively flat market. The ISDEX twice failed to penetrate the lower boundary (770) of its bearish rising wedge; that boundary has now risen to about 780, just below the key resistance level of 790. Support on the ISDEX is at 693-700, 650 and 600. The S&P’s rally failed this week at 1480-1490 resistance. Support can be found at 1450-1460 and 1434-1440. Critical support on the S&P is 1390, the index’s October 1998 uptrend line. A break of that trendline could carry the S&P to 1170 or lower, so we do not want to violate that line.
