Bulls Score A Comeback

The stock market overcame downgrades, warnings, news of corporate investigations and weak economic data to end the day in positive territory Wednesday.

The Nasdaq surged 27 to 1320, the S&P 500 rose 5 to 896, and the Dow gained 44 to 8494. Volume rose to 1.54 billion shares on the NYSE, but declined to 1.6 billion on the Nasdaq. Advancers led 20 to 12 on the NYSE, and 20 to 11 on the Nasdaq. Upside volume was 65% on the NYSE, and 81% on the Nasdaq.

After the close, Expedia , Foundry , LSI Logic and Genesis Microchip topped estimates. AOL matched estimates, and ESS and Digital River missed.

During the day, KLA-Tencor gained 7% despite warning.

Computer Associates surged 21% after beating estimates.

Storage Tech , Websense and NetIQ also posted strong gains on better than expected results.

RealNetworks lost 6% on a warning. Overture fell 6.8% despite beating estimates, and Drugstore.com fell after missing estimates.

Cymer rose 7.7% on its earnings report, while webMethods was unchanged on its report.

Silicon Labs fell 20% despite beating estimates, while CheckFree gained 3% and Citrix lost 6.7%.

Hotels.com rose 3.6% on better than expected results, while Photon Dynamic fell 10% after missing estimates.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

One very nice recovery for the market today, as the Dow (first chart) and S&P (second chart) both recovered after falling back below their May downtrend lines. Those downtrend lines are critical support for the market, at about 8320 on the Dow and 880 on the S&P. The Dow faces tough resistance in the 8700-8800 area, and the S&P in the 910-920 area. The Nasdaq (third chart) took out 1315-1320 resistance. 1340-1347 is next resistance, and 1390, the March downtrend line, now seems within reach. The Nasdaq 100 (fourth chart) closed right at resistance at 990. A move above 1000 would likely target 1040. The SOX, the semiconductor index (fifth chart), closed right at its May downtrend line today despite dismal news in the sector, and could be poised to break out tomorrow. One negative is the lack of new highs in the rally so far. At this stage, they should be far above the 21 and 36 new highs that the NYSE and Nasdaq respectively registered today. A rally needs leadership, and not much has emerged yet on this one. Those new highs need to begin to expand to sustain this rally.






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