Internet stocks outperformed the broader market on Tuesday, as traders shook off downgrades to Amazon.com and Yahoo.
The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 7 to 326, and the Nasdaq climbed 24 to 2420. The S&P 500 added 3 to 1298, and the Dow lost 40 to 10,581. Volume rose to 540 million shares on the NYSE and 940 million on the Nasdaq. Advancers led by 14 to 13 on the NYSE, and 19 to 14 on the Nasdaq. 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.
B2B leader i2 Technologies preannounced better than expected revenues, but the stock slipped 15/16 to 41 after trading as high as 46 3/16 on the news. i2 may have pushed some revenues out to the first quarter in anticipation of an IT spending slowdown, analysts said. Ariba
slipped 5/16 to 36 3/4, 4 points off its high, and Commerce One
tacked on 1/2 to 18 1/2.
Amazon.com announced that revenues would exceed $960 million, at the low end of the $950 million-$1.05 billion range expected by analysts. The stock rose 1/2 to 15 7/16 despite analyst downgrades on revenue and margin concerns.
Analysts also downgraded Yahoo ahead of its earnings report tomorrow night, but the stock rose 11/16 to 27 7/8. For the first time, Yahoo’s whisper number (12 cents) is lower than the official estimate (13 cents).
eBay surged 2 1/4 to 32 7/8 on a Prudential Strong Buy rating and $125 price target, after eBay announced the acquisition of South Korea’s Internet Auction Co.
TIBCO rose 15/16 to 32 1/8 after NBC Internet
said it will use TIBCO’s portal technology to deliver stock quotes and market news.
The parade of earnings warnings continued; 590 companies have warned for the fourth quarter so far, according to First Call. Webvan , unchanged at 15/32, Open Market
, off 1/32 to 1 13/32, and Quokka Sports
, down 1/16 to 9/16, all warned.
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
The Nasdaq left an opening gap at 2396 this morning; we suspect that may fill before the index turns higher. The rule of thumb is that gaps occurring within patterns or trading ranges tend to fill within two or three days, but that breakout gaps do not need to fill until the trend has changed, if ever. However, that opening gap may have formed an island reversal (see arrows on first chart), giving the index upside potential to 2650, or to the top of a new up channel. Pretty lackadaisical action so far today. While the weakness in the Dow is a concern, sellers don’t seem to have the conviction they once had. The Nasdaq and Nasdaq 100 seem to be forming new rising channels here:
The S&P 100 is forming a strong lower support line here (first chart), while the S&P 500 is forming a large trading range between 1277 and 1350 (second chart). A break of 1350 could carry the S&P to 1420.
The ISDEX is also setting up a wide trading range, between 300 and 385. A break of 385 could carry the Nets to 470.
The Dow is looking weaker than the Nasdaq and S&P here; it is the only index trading below the level where the Fed cut interest rates (10,600), a level that was also strong support on the index. Critical support on the Dow is 10,300, while a close above 11,007 would confirm a new bull market under Dow Theory.
Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.
