Bulls Shake Off Bad News

Weak retail sales, accounting fraud, terrorist threats, none of that mattered on Thursday as stocks soared for the third straight day, boosted by an IMF bailout of Brazil.

The Nasdaq rose 35 to 1316, the S&P 500 climbed 28 to 905, and the Dow surged 255 to 8712. Volume rose to 1.65 billion shares on the NYSE, but declined to 1.53 billion on the Nasdaq. Advancers led 22 to 9 on the NYSE, and 20 to 12 on the Nasdaq.

After the close, a warning from Emulex sent the storage sector lower.

During the day, Intel gained 3.7% after reaffirming guidance but saying it won’t expense options. KLA-Tencor also reaffirmed guidance.

Microsoft gained almost 4% on a Passport settlement with the FTC, but Cisco finished up only 9 cents.

Wireless Facilities rose 2.8% on better than expected results, but Aether slipped a penny despite topping 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.

A breakout in the Nasdaq (first chart) today, but be careful – the breakout came on low volume, making it suspect. A move below 1290 tomorrow would look bearish. If the index can continue up, it will run into the 1357-1387 resistance zone again. For the S&P and the Dow (second and third charts), the picture turned cautiously bullish today, with a second follow-through day on the NYSE, and, of all things, “three white soldiers,” the opposite of the bearish “three black crows” the indexes formed last week. Will they work out any better than the three black crows did? For starters, they should hold the middle of the pattern – 8350 and 870 – as support. If they can do that, the pattern predicts minimum upside potential to 9040 on the Dow and 939 on the S&P. That would essentially be a retest of the 950 resistance level on the S&P (fourth chart), a major resistance level for the entire market. Before that, however, the indexes would have to clear 8800-8927 resistance on the Dow, and 911-915 on the S&P. And finally, strictly for fun, it’s time to introduce you to the “Abby Joseph Cohen indicator.” For whatever reason, sharp sell-offs tend to begin within three days of the Goldman Sachs analyst’s bullish pronouncements, and she appeared on CNBC again tonight. Will it work again this time? Stay tuned.




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