eBay Soars On Bullish Revenue Forecast

eBay carried Internet stocks higher on a bullish revenue forecast, but blue chip stocks sold off sharply under the weight of rising oil prices and a sinking euro. Engage soared after hours on a bullish earnings report.

The ISDEX gained 12 to 805, and the Nasdaq climbed 31 to 3897. But the S&P 500 slipped 8 to 1451, and the Dow lost 101 to 10,687, but more than 100 points off its low. Volume rose to 1.1 billion shares on the NYSE and 1.8 billion on the Nasdaq. Decliners led 16 to 11 on the NYSE and 23 to 16 on the Nasdaq. Engage reports earnings tonight, and CMGI and Liberate report tomorrow. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.

After the bell, Engage , which slipped 7/16 to 8 1/16 in regular trading, beat earnings estimates by 14 cents with a 14-cent loss. The stock soared to 10 after hours. The company also announced that it would lay off 175 employees, or about 13% of its workforce, and reorganize from five units to two. The company will take a first quarter charge of about $3.5 million.

eBay soared 10 11/16 to 76 3/8 on news that the company is projecting 50% year-over-year revenue growth through 2005. For more on the story, click here.

PurchasePro bolted 11 1/4 to 73 on a Lehman Brothers Buy rating and $120 price target.

Handspring gained 5 1/2 to 51 1/2 on a Wall Street Journal report that the company will introduce a $299 device that combines the handheld organizer with the cell phone.

Amazon.com , off 3 1/8 to 37 5/8, continued to slide on concern about a lukewarm analyst meeting yesterday and the loss of Yahoo’s business to Barnesandnoble.com , which gave back 1/8 to 5 13/16. Chase H&Q reiterated Buy on Amazon and expressed faith in the company’s ability to execute. Technical note: As we said some time ago, if Amazon bottoms in the 31-36 range in the September-October timeframe, it will form an inverse head-and-shoulders bottom.

Yahoo gained 2 1/16 to 110 1/8 on optimism that Barnesandnoble.com offered the company good terms. At least one analyst thinks the Barnesandnoble/Yahoo deal was a plus for Amazon; click here for the story.

[email protected] lost 11/16 to 15 1/2 after CEO George Bell announced his resignation. Bell will remain chairman through 2001.

NaviSite beat estimates by 5 cents with a 34-cent loss, and Prudential upgraded the stock to Strong Buy, but the stock fell 1 3/16 to 37 11/16.

Homestore.com lost 1 11/16 to 48 1/2 on reports of a Justice Department investigation into the company’s competitive practices.

USinternetworking lost 23/32 to 7 9/32 on a First Union Securities downgrade and concerns that the company will miss its numbers.

HearMe fell 2 51/64 to 4 on a revenue warning. US Interactive also fell on an earnings warning, down 1 5/16 to 2 11/16. TheStreet.com also fell on an earnings warning, down 1 1/8 to 5.

Some technical comments on the market: The good news is that the Dow preserved its October 1998 trendline at 10,500 today, just touching the t

op of the line at 10,575. The bad news is that the S&P 500 broke its October 1998 trendline (1440) on an intraday basis, but pulled back above it by the close. Once a major trendline has been pierced, whether to the upside or the downside, more often than not there’s a further move in the direction of the break, so there could be more selling ahead. It usually doesn’t take more than a few days for a follow-through move, so keep an eye on that level for the next few trading days. Next support is 1435-1440 on the S&P 500, then 1425, 1414, and then critical support at 1405: the line connecting the March (1325), April (1340) and May (1361) bottoms. If the S&P 500 is forming a topping pattern here, that is the line in the sand. To the upside, first resistance on the S&P is 1460, then 1480-1490. If the Dow fails to hold 10,500, it has one more chance to stop a wider sell-off in the 10,200-10,300 area. To the upside is 10,750-10,800 resistance. With the Dow’s break of 10,750 today, all three major indexes have broken their uptrends from the spring correction, but the Nasdaq has recovered back above its May trendline at about 3825.

The Nasdaq turned back right at the 38% retracement level of 3913. The last rally was short-circuited after a day, so we want to see the Nasdaq rally soon. Other Fibonacci levels from the 4259-3702 decline to think about: 3980 (50%) and 4047 (62%). To the downside, if 3794 doesn’t hold, the Nasdaq could be set up for a retest of its old October 1998 uptrend line at 3700. Below 3700, the Nasdaq could find a bottom in the 3521-3600 range; lower than 3500, and the May lows (3042) would likely be retested. The ISDEX found support in the 750 range yesterday, a long way from its May trendline, which is at 720, and looks better than the major indexes. The ISDEX cleared 800 resistance today, so it could have room to 850, the 50% retracement level.

One other technical note: Market technician Peter Eliades reports that the NYSE has formed a “Sign of the Bear” for only the second time since the frequent bear markets from 1966-1974. The last time was April 1998, which marked an important top in the NYSE advance/decline line and preceded the start of the August-October 1998 correction by a few months. It’s a complicated technical pattern, and one that hasn’t been very well documented, but it’s worth noting given all the other negatives here. The pattern essentially is a three-to-four week period of churning on the NYSE while the exchange’s internals deteriorate; in short, the market’s support is eroding from below.

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