Internet and technology stocks continued to outperform blue chip issues on Wednesday, rising on better-than-expected earnings from Lycos, BEA Systems and Analog Devices.
The ISDEX gained 5 to 758, and the Nasdaq added 31 to 3882. The S&P 500 rose 3 to 1487, but the Dow dropped 34 to 11,033 on weakness in retail stocks. Volume rose to 430 million shares on the NYSE and 645 million on the Nasdaq. Decliners led 14 to 11 on the NYSE, but advancers led 18 to 16 on the Nasdaq. The Consumer Price Index came in a little stronger than expected, showing a 0.2% gain, but the core was in line with estimates at 0.2%. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.
Lycos reported fourth quarter earnings of 12 cents a share, beating estimates by 4 cents, and revenues rose 89% to $87.9 million. The stock rose 2 7/8 to 60 13/16. The company expects to merge with Terra Networks
in October.
Amazon.com gained 1 to 38 9/16. Merrill Lynch reiterated near-term Accumulate and long-term Buy on the company on the belief that the sector has bottomed.
eBay continued to rise after CEO Meg Whitman’s keynote address Monday night at Pacific Crest’s E.Conference, gaining 4 3/16 to 56 1/16.
Priceline.com gained 13/16 to 26 3/16. In an SEC filing yesterday, the company boosted its recently reported second-quarter fee-based revenues from $22.9 million to $25.7 million, improving disappointing second-quarter results.
webMethods , up 6 3/8 to 102 5/16, and Interwoven
, up 2 5/8 to 72 3/4, rose on news that the two will provide a complete solution for Fortune 100 companies to use in B2B marketplaces.
Chordiant Software soared 3 7/32 to 12 1/2 on news of a $24 million contract from Lloyds.
Kana Communications bolted 5 1/4 to 37 3/4 on news of an alliance with IBM. General Magic
, up 29/32 to 5 25/32, announced an agreement with IBM to integrate the company’s MagicTalk platform with IBM’s DirectTalk and WebSphere Voice Server. Juno
, up 11/16 to 5 5/8, gained on news that its free Internet access will be bundled with IBM PCs.
Internet America lost 11/64 to 3 25/32 after reporting a fourth-quarter loss of 41 cents a share, in line with estimates.
SonicWALL lost 8 to 77 after Janney Montgomery Scott said the company’s relationship with Ramp Networks
may decline in coming quarters. Ramp accounts for about 5% of SonicWALL’s business.
Portal Software recouped 2 13/16 to 54 1/8. Investors have been nervous over the company’s earnings, due out tomorrow.
Some technical comments on the market: The Dow turned up this morning at 11,009, but just above its 11,006 support a few days ago, but the index’s weak bounce suggests that we may need another test of that level. The Dow needs to stay above the 10,950-10,975 area to preserve the upside breakout of the diamond formation. If the index can test that level and rebound strongly, the breakout will look healthier than it has so far. As we’ve noted, the breakout came on volume that was too low for comfort, and technical indicators on the index were overbought. This pullback is resolving some of that, but it is troubling that volume is up substantially on the downside move. Not a lot to like about the breakout. Resistance on the Dow is just under 11,200. Home Depot disappointed analysts yesterday with in-line earnings, and Hewlett-Packard reports earnings tonight.
The Nasdaq turned b
ack again this morning at its key moving averages. The 50-day moving average at 3917 provided this morning’s resistance. The 200-day is at 3940. The index appears to be stuck in a narrowing trading range, and has yet to establish firm direction either way. The index may be forming a bearish flag pattern in the daily chart since bottoming at 3521 recently, giving the index potential for more downside, as much as 600 points. A break below 3700 would be a warning sign. The index has not had a high-volume follow-through day to confirm its recent reversal, a negative sign. Tomorrow is the final day for the Nasdaq to accomplish that. The Dow and S&P barely met the minimum requirements for follow-through days. The ISDEX also may be forming a bearish flag pattern here, signaling potential further downside on that index. Key resistance is now around 790, the lower boundary of a broken bearish rising wedge. Support on the ISDEX is at 693-700, 650 and 600; a break below 700 would just about break the bearish flag pattern. The S&P continues to struggle with 1480-1490 resistance. Below that, support can be found at 1450-1460 and 1434-1440. Critical support on the S&P is 1390, the index’s October 1998 uptrend line.
