Nets, Techs Drop, But Blue Chips Soar

Internet stocks followed the Nasdaq lower on Wednesday, but the Dow soared on rumors of a JP Morgan buyout.

The ISDEX lost 13 to 822, while the Nasdaq dropped 60 to 4083. The S&P 500 dropped 2 to 1505, but the Dow rose 109 to 11,369. Volume rose to 435 million shares on the NYSE and 780 million on the Nasdaq. Advancers led 13 to 12 on the NYSE, but decliners led 21 to 14 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site. rose 2 5/16 to 48 on comments from JP Morgan that the stock is
beginning its holiday season run-up and could gain another 30% by the end of the year. The stock also has a large short interest fueling its rise. Other e-tailers followed Amazon higher. gained 27/32 to 4 1/32, added 29/32 to 4 3/16, and eToys climbed 1 1/4 to 6 1/8. Technical note: appears to have broke out of an inverse head and shoulders bottom at about 44 yesterday. We noted last week that the stock had broken out of a falling wedge, a bullish sign, with upside to $60.

Proxicom gave the beleaguered Internet consultant sector some good news, adding 7/8 to 20 1/2 on a multi-million dollar deal with Toyota to build an online marketplace. The firm also said it is experiencing strong demand.

CS First Boston sent shares of Ameritrade and E*Trade after upgrading the stocks to Buy from Hold. Ameritrade gained 2 1/8 to 20 3/4 and E*Trade rose 1 5/16 to 19 3/8.

AOL Latin America rose 5/8 to 8 1/2 after reporting a fourth-quarter loss of 18 cents a share. Revenues rose 55% sequentially to $4 million. No estimates were available.

Yahoo gave back 3 11/16 to 113 7/16, wiping out yesterday’s gain. The stock has been beaten down recently on earnings and revenue concerns.

B2B stocks gave back more of their gains after reversing yesterday. i2 lost 11 3/16 to 164 after trading as high as 188 yesterday, and Commerce One slipped 2 3/4 to 66 3/8 after once again failing at 70 resistance.

Some technical comments on the market: The Nasdaq and the ISDEX broke rising wedges to the downside today, following a similar break in the Nasdaq 100 yesterday. The breaks give those indexes potential downside to last month’s lows, but we are hopeful that the sell-off can end at the downtrend lines broken two weeks ago. That downtrend line is now at about 3900 on the Nasdaq and 3800 on the Nasdaq 100. If the indexes can turn up there, it would be a positive sign. A break below those levels would likely lead to a wider sell-off. First support on the ISDEX is 790-800.

The S&P 500 also broke a rising wedge to the downside yesterday and retraced to that boundary today (1513). As the last break of a rising wedge didn’t lead to much of a sell-off, we won’t worry about this one unless the S&P breaks 1500 to the downside. First support after that is 1490.The index has met with strong resistance around its all-time closing high of 1527. The Dow, easily the best-looking of the major indexes, finally cleared its April secondary high of 11,287, and is now facing 11,400 resistance. Next up is 11,500. 11,100 is the first important support, but the more important support is 10,900, the upper boundary of the Dow’s bearish diamond pattern, which the index broke out of last month.

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