Internet stocks soared more than 4% on Wednesday. The broader market also gained, but finished off its highs of the day. Dell Computer guided revenue estimates lower after the bell.
The ISDEX added 31 to 721, and the Nasdaq rose 67 to 3523. The S&P 500 added up 7 to 1434, and the Dow climbed 64 to 10,784. Volume rose to 1.16 billion shares on the NYSE and 2.1 billion on the Nasdaq. Breadth was negative, however, with decliners leading by 15 to 12 on the NYSE and 21 to 18 on the Nasdaq. The big economic report for the week is Friday’s unemployment report. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.
America Online gained 3.30 to 58.65 on comments from Merrill Lynch that the company’s merger with Time Warner should be approved by the end of the month. At 2001 estimates of at least $1.00, Merrill said the combined company’s valuation is attractive.
E.piphany soared 11 1/8 to 64 3/8 on news of a joint venture with Sun Microsystems
.
Earnings warnings continued to trickle in. SciQuest , off 11/16 to 4 5/8, said it would report revenues at the lower end of the $19-$25 million estimate range. The company said it will post a loss of 43-45 cents, versus estimates of a 37-cent loss. Calico Commerce
, off 1 11/16 to 3 1/2, also warned, as did Lante
, down 1 5/32 to 3 19/32. Lante is the latest in a string of Internet consultants to warn of lower revenue from dotcom clients.
Amazon.com gained 1 3/16 to 36 1/4 after trading as low as 32 on a Robertson Stephens research note that was the latest to question the company’s business model. The study estimated that Amazon lost an average of $2.91 per order, but said Amazon has a chance to evolve the business model and generate long-term profits. Separately, Amazon said it will launch an online photo store with Ofoto. Technical note: Amazon fell below 35, where it has found support repeatedly since breaking out of a falling wedge at that level in August. However, as we’ve said repeatedly, a retest of the 31 level was not out of the question, and could form the basis for an inverted head-and-shoulders bottom.
Yahoo gained 3 9/16 to 87 9/16. The company, which has sold off on earnings concerns, reports earnings next Tuesday.
The IPO of Oplink Communications priced at 18, opened at 29, and traded as high as 36 and as low as 26 1/2, closing at 33 1/8. The company is a supplier to Cisco
and JDS Uniphase
.
Interactive Pictures rose 1 1/8 to 5 9/16 on the launch of eBay
Picture Services.
RealNetworks surged 5 1/8 to 37 7/16 on a CS First Boston Strong Buy rating.
Promotions.com was unchanged at 1 13/16 after announcing a reorganization and 13% workforce reduction that the company said will save $3-$3.5 million a year.
B2B stocks recovered from their recent sharp decline. i2 Technologies gained 7 1/2 to 159 1/2 after trading as low as 141 7/8. Ariba
added 15 1/2 to 128, and Commerce One
climbed 7 7/16 to 66 5/16.
Some technical comments on the market: Note: We will now be including charts with the technical market commentary; just click on the links in the story below to go to them. If you have trouble accessing the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html
Despite the positives that we mentioned at midday, today has to go down as disappointing: breadth was awful, and major bottoms tend to occur with broad-based buying. Not the case today, and the major indexes gave up a lot of their gains by the close. Hopefully we’ll see broader-based buying tomorrow. Both the Nasdaq and w Nasdaq 100 held critical support today, and in the process have redrawn their broken October 1998 trendlines to encompass the May 2000 lows. The Nasdaq 100 held its trendline beautifully, but the Nasdaq pierced its trendline slightly. As we said yesterday, if those lines break (3400 Nasdaq, 3300 Nasdaq 100), the May lows will likely be restested, and may not hold. To the upside, first important resistance is the Nasdaq’s downtrend line just below 3700. The first important Fibonacci level is 3715, the 38% retracement of the 4259-3382 decline. The ISDEX found support at 671 today and recovered nicely back above 700 support. Next resistance is 735, where the ISDEX broke critical support on Monday, its May uptrend line, then 750-760. To the downside, first support is 650, then 600, and then the May low of 560.
The Dow broke back above its downtrend line at around 10,750 today, but the more important test is the 10,850-10,900 area. If the index can get above 10,900, the cycle of lower highs will be broken and the old economy stocks could have room to run. To the downside, critical support is the October 1998 trendline at about 10,600 (also in the chart, note the gray lines, the bearish diamond pattern that could signal a market top). The S&P 500 is back above its April trendline at about 1425 (the black line) after trading as low as 1416 today, just above its late July low of 1414. To the upside, resistance can be found at the broken May trendline (the gray line) at about 1465.
