eBay Posts Blow-Out Earnings

eBay posted strong earnings after the bell on Thursday, joining a string of technology companies trading higher after hours on good earnings news, including Microsoft and Nortel Networks.

Stocks rose during the day, buoyed by strong earnings from Check Point Software and IBM. Rumors of another Fed rate cut in the wake of the California utility crisis also boosted stocks.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 4 to 411, and the Nasdaq climbed 85 to 2768. The S&P 500 added 18 to 1347, and the Dow rose 93 to 10,678, boosted by IBM’s earnings. Volume declined to 1.3 billion shares on the NYSE, and 2.5 billion on the Nasdaq. Advancers led by 16 to 12 on the NYSE, and 21 to 17 on the Nasdaq. Economic reports continued to show a significant slowdown in manufacturing. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

eBay soared 7 to 50 after posting earnings of 9 cents a share, 2 cents better than estimates. Microsoft , Commerce One , and Nortel all traded higher after hours on good earnings news. Sun Microsystems traded slightly lower after coming in light on revenues, and Critical Path plunged 15 points to 10 after missing estimates.

During the day, Check Point soared 11 7/16 to 138 after beating estimates by 8 cents with 46-cent earnings and declaring a 3-for-2 stock split.

i2 Technologies beat estimates by a penny with 9-cent earnings, but the stock fell 2 7/8 to 51 on concern about competition from the likes of Oracle and comments that business could slow .

Travelocity.com surged 4 3/8 to 19 5/16 after beating estimates by 9 cents with a 5-cent loss. Expedia rose 2 1/4 to 14.

Vignette plunged 4 3/4 to 7 3/4 on an earnings warning. BroadVision fell 2 1/4 to 15, and Art Technology lost 4 1/2 to 20 3/8.

Other earnings warnings came from Scient , down 7/16 to 3, S1 , off 1 1/4 to 6 1/2, Entrust , down 3/4 to 16 5/8, and Jupiter Media Metrix , down 1 1/16 to 7 3/8.

Mercury Interactive surged 8 1/8 to 89 1/16 after beating estimates by 4 cents with 28-cent earnings. Marimba , up 25/32 to 7 29/32, beat estimates by 6 cents with a 1-cent loss.

Analysts dismissed yesterday’s speculation that Yahoo could be a takeover target, but traders didn’t appear to be listening, sending the stock 4 1/8 higher to 34 3/8.

Openwave continued to rise on positive analyst comments, climbing 2 1/4 to 49 3/8, but off its intraday high of 53 1/4.

Networkers had a tough time despite positive earnings from Redback Networks , down 7 11/16 to 40 7/8, Extreme Networks , down 5 1/2 to 42 3/8, Avici , off 1 to 33 15/16, and Efficient Networks , off 15/16 to 13 1/2.

NBC Internet slipped 3/16 to 4 after announcing 30% layoffs.

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< /a>

Until today, the Nasdaq had a perfect record since the Fed cut rates: five up days on rising volume, and five down days on declining volume. We couldn’t ask for better price and volume action. However, the Nasdaq broke that string of perfection today, rising on 10% lower volume, a still-healthy 2.5 billion shares. While some sort of pullback to relieve overbought conditions would seem to be in order, momentum has clearly shifted to the side of the bulls. The Nasdaq began to fill the 2618.55 gap created yesterday, but then turned up. While partially-filled gaps are usually filled within a matter of days, this one does not necessarily have to fill because it occurred on a breakout out of the index’s 4 1/2-month downtrend. The index also formed a bullish engulfing pattern today, taking out yesterday’s lows and highs in the same day and closing at the high. That could indicate further upside ahead. The Nasdaq is so far being contained by the upper trendline of a new rising channel (first chart). A smaller, steeper uptrend is forming within that channel (the gray lines), and could lead to a break out of the larger channel. The Nasdaq and Nasdaq 100 (second and third charts) continue to trade above their September downtrend lines broken yesterday, a good sign. The Nasdaq 100 appears to be forming a bearish rising wedge (again, the third chart), but the bullish price and volume action does not support a picture of a weak rally, which a rising wedge would normally indicate, so we are not taking the bearish pattern seriously. Again, volume is always half the picture of any chart pattern. The Nasdaq 100 partially filled a gap at 2470.72 today. The maximum downside expected on any pullback would be to about 2425 on the Nasdaq, the lower boundary of the rising channel.

The ISDEX also gapped up above its September downtrend line yesterday and has upside potential to 450-470. However, the Nets are up 34% in less than two weeks, so we wouldn’t be surprised to see a pullback there, either. The ISDEX created a gap at 388.5 yesterday that was partially filled today.

The S&P 500 took out its September downtrend line today and closed above it, another win for the bulls. The negatives are the lower volume on today’s breakout and the fact that the index formed a gravestone doji yesterday, trading strongly higher during the day only to finish back at the unchanged level, a potential reversal sign. However, the index just missed forming a bullish engulfing today, so it almost negated yesterday’s doji.

The Dow put in a much better performance today, finally blasting off out of its rounding pattern at 10,500 support. However, the index failed to take out 10,700 resistance, closed well off its highs, and half its gains were due to IBM. The index remains the only major weakness we see in this market; healthy markets move in sync. Critical support on the Dow is 10,300, while a close above 11,007 would confirm a new bull market under Dow Theory.

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