Buyers Finally Show Up

Stocks posted strong gains on Tuesday, as buyers piled into beaten-down technology and Internet stocks despite continued earnings warnings.

The ISDEX soared 23 to 289, and the Nasdaq surged 96 to 2239. The S&P 500 rose 20 to 1261, and the Dow climbed 60 to 10,622. Volume rose to 520 million shares on the NYSE, and 960 million on the Nasdaq. Advancers led 17 to 11 on the NYSE, and 21 to 12 on the Nasdaq. For earnings reports, visit our earnings calendar at and reported earnings at For after hours quotes and news, visit our after hours trading site at

Traders shook off an earnings warning from New Focus , off 2 9/16 to 18 11/16, which blamed its shortfall on inventory build-up at customers like Corning , up 2.26 to 31.81, and Corvis , down 17/32 to 8 1/2.

Portal Software rose 1 3/16 to 8 3/16 on contract wins with Nokia and Time Warner Cable. surged 3 1/16 to 30 after being added to the Goldman Sachs Recommended List. But getting dropped from that list didn’t seem to hurt Yahoo , which climbed 1 3/16 to 23 3/8.

Veritas , up 7 3/16 to 67, provided much-needed support by reaffirming its outlook.

Check Point rose 8 9/16 to 68 7/16 at the start of a meeting with analysts. Internet Security rose 5 1/8 to 47 7/8.

Vignette soared 1 7/16 to 6 19/32 after hiring away Siebel Systems’ vice president of sales.

B2B stocks were strong, led higher by Commerce One , which soared 3 53/64 to 18 3/4.

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Buyers finally showed up today, but they aren’t showing too much resolve just yet; the S&P 500 and the Nasdaq were both stopped by downtrend lines from September today. As we’ve said before, the Dow must close above 10,650, the S&P above 1275, and the Nasdaq above 2318 for any sort of a bottom to be considered in place. To the downside, critical support is 10,292 on the Dow, 1214 on the S&P 500 and 2071 on the Nasdaq.

The Nasdaq gapped up above its January 31 downtrend line this morning (first chart), but ran into the middle of three downtrend lines from September at 2256 (second chart). A close above 2318 would give the index a higher high. The Nasdaq formed another gap at the open today; that leaves two gaps that will likely be filled at some point, at 2142 and 2117. Critical support is the Nasdaq’s reformed 1990 logarithmic trendline at 2071. Finally, a look at a one-year daily chart of the Nasdaq, which peaked a year ago March 11; note that the index could gain 50% and still be in a downtrend.

The S&P 500 broke above its February downtrend line this morning (first chart), but was halted at its September downtrend line (second chart). If the index can close above 1275, its early January low, it could be headed for 1335. 1234-1240 is first support on the index, and 1214 is critical support.

The Dow’s must get back above 10,650 on a closing basis to be restored to a positive bias. To the downside, 10,450-10,500 is the first strong support. A close below 10,292 could lead to a retest of the index’s lows in the 9600-9700 area, although 10,200 or so could also provide support. The Dow Transports are back above 2900, a good sign. To the upside, the Transports must get back above 3000.

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