Nets, Techs Ignore Strong Jobs Data

Blue chip stocks sagged Friday on a stronger than expected gain in hourly earnings, but technology and Internet stocks continued their winning streak.

The ISDEX gained 12 to 664, and the Nasdaq rose 22 to 3451. The S&P 500 slipped 1 to 1426, and the Dow lost 62 to 10,817. Volume declined to 992 million shares on the NYSE and 1.8 billion shares on the Nasdaq. Decliners led by 14 to 13 on the NYSE, but advancers led 20 to 18 on the Nasdaq. The number of new jobs rose less than expected in October, but wage growth was strong and the unemployment rate remained low at 3.9%. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

Priceline lost 2 3/32 to 4 3/4 after the company matched reduced estimates but announced the departure of CFO Heidi Miller. rose 7/8 to 17 on a deal with Terra Lycos , up 1 15/16 to 26 3/4.

BroadVision rose 2 7/16 to 35 3/4 ahead of its addition to the S&P 500 after the close.

Internet infrastructure leaders rose after Sprint announced it would increase capital expenditures next year, the first telecom giant to do so. However, the company must raise more than $2 billion to do so. Sprint lowered earnings estimates, but said bandwidth demand was strong. Cisco Systems , which reports earnings Monday night, rose 1 to 56 3/4. JDS Uniphase gained 5/8 to 81 1/4, and Juniper Networks rose 20 5/8 to 215 1/2.

Ziplink became the latest victim of the telecom shakeout, dropping 3/4 to 1 after announcing that it does not have sufficient funds to meet a $1.9 million past due payment to WorldCom, which has demanded payment. Ziplink said is seeking a merger partner.

The IPO of Optical Communications Products received a warm welcome, pricing at 11, opening at 18, rising to 20 1/2, and ending unchanged at 18. surged 1 19/32 to 6 15/32 after beating estimates by 6 cents with a 16-cent loss. CS First Boston upgraded the company to Strong Buy. Jupiter Media Metrix soared 3 1/32 to 15 1/32 after beating estimates by 7 cents with a 1-cent loss.

GoAmerica rose 9/16 to 11 1/2 after matching estimates with a 27-cent loss. Bluefly added 1/16 to 2 1/2 after beating estimates by 11 cents with a $1.01 loss. slipped 3/16 to 2 3/16 after beating estimates but announcing the resignation of CEO Steve Markowitz. added 1/8 to 1 13/32 after beating estimates by 8 cents with a 22-cent loss. added 1/4 to 4 3/16, down from an intraday high of 5, after beating estimates by 51 cents with a 41-cent loss. slipped 1 5/32 to 3 15/32 after beating estimates by 4 cents with a 31-cent loss.

Digital Island lost 1 7/8 to 11 3/8 on a Merrill Lynch downgrade amid doubts about the company’s path to profitability. WebEx rose 5 1/2 to 49 on a CIBC Strong Buy.

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The Nasdaq 100 made it interesting today: the index stuck its head out above the upper boundary of a bearish rising wedge or pennant, but pulled back in. An upside break with force would be bullish. The downside on the Nasdaq 100 is 3000 if the pattern is a rising wedge, and 2700-2800 if it is a bear pennant. The difference between the two is time: a pennant completes in less than three weeks, a wedge takes three weeks to three months to form. This pattern has been building for seven trading days, so it is still a pennant. If the Nasdaq and Nasdaq 100 fail to take out their recent highs around 3500, they would continue a cycle of lower highs, which is also a negative. Given that the only thing on the horizon is Cisco’s earnings, we have to wonder if there could be some disappointment there, or at least some selling on the news.

The S&P 500 continues to form a much bigger rising wedge, with an apex at least a month away. Even if it continues to form, the index could have quite a bit of upside before the boundaries converge, but a retest of 1300 may be in the cards a couple of months down the road. The entire 1420-1460 range could be tough resistance for the S&P, since it was a big consolidation area back in September.

The ISDEX cleared its highest possible downtrend line yesterday, and is showing surprising strength as investors flock back into beaten-down Net stocks. Can the trend continue? 700 is next resistance on the index. That lower line at 575 will hopefully form a new trendline for the ISDEX.

The Dow is pulling back a little more than we would like to see, going back below its diamond apex (first chart) at 10,850. The Dow moved out of its uptrend today (second chart), but could be forming a small bull pennant, setting up a potential 700-point upside move.

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