Economic Data Buoys Stocks

More reports that manufacturing has begun to recover sent stocks higher on Wednesday.

The ISDEX was unchanged at 166, and the Nasdaq rose 24 to 1890. The S&P 500 climbed 16 to 1162, and the Dow bounced 140 to 10,574. Volume declined to 1.5 billion shares on the NYSE, and 1.9 billion on the Nasdaq. Advancers led 23 to 8 on the NYSE, and 22 to 12 on the Nasdaq.

After the close, the proposed merger of Hewlett-Packard and Compaq won FTC approval.

During the day, Hewlett-Packard slipped and Compaq rose after their merger proposal won the support of the all-important Institutional Shareholder Services.

Storage stocks were roughed up on a warning from McData , which fell 27%. Emulex , Brocade , QLogic , Network Appliance and EMC all fell on the warning.

Amazon rose 2% despite the resignation of CFO Warren Jenson.

DoubleClick and Liberate fell on downgrades.

Intel edged higher ahead of the company’s mid-quarter update tomorrow.

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

The Dow (first chart) continues to push up against a rising resistance line dating back to early December; that line, at about 10,575 tomorrow, is an important pivot on the Dow. To the Downside, 10,400-10,425 looks like the first strong support. To the upside, the weekly (second chart) looks like some real resistance around 10,700-10,800. The S&P 500 weekly (third chart) looks like a nice downtrend line breakout at 1140; a very important support level now. In the daily (fourth chart) 1150 is first support, and 1165-1177 is resistance. The S&P 100 (fifth chart) is right under significant resistance in the 590-600 area. The Nasdaq (sixth chart) cleared 1880 resistance, but has some tough moving average resistance right ahead in that chart. Upside may be limited for the next week and a half due to options expiration; max-pain, where most QQQ options will expire worthless, is right at 37, 2% lower than today’s QQQ close. 1880 is first support, then 1850, 1805 and 1780-1793. The SOX, the semiconductor index, continues to sit right under a very critical trendline (seventh chart).





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