Blue chip stocks led the market higher on Monday, as technology and Internet stocks struggled to build on Friday’s reversal.
The ISDEX http://www.wsrn.com/apps/ISDEX/ climbed 4 to 303, and the Nasdaq added 9 to 2271. The S&P 500 rose 8 to 1254, and the Dow surged 88 to 10,530. Volume declined to 450 million shares on the NYSE, and 850 million on the Nasdaq. Advancers led 18 to 9 on the NYSE, and 20 to 13 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.
Traders awaited tomorrow’s release of the latest data on consumer confidence from the Conference Board. Fed Chairman Alan Greenspan has said that consumer confidence is critical to avoiding recession. The market turned around Friday on rumors that the Fed would cut rates this week, but other Fed watchers said today the Fed will likely wait until its next meeting on March 20 to cut rates. The Fed announced that Greenspan is revising his Senate testimony of two weeks ago that was criticized for being too rosy; traders took the news as a sign that Greenspan could signal further rate-cutting in Wednesday’s House testimony.
Cisco fell 1 5/16 to 25 11/16 after CS First Boston cut earnings estimates on the stock. Cisco has so far held long-term support at 25. Juniper Networks
lost 3 15/16 to 70 13/16.
NetIQ plunged 11 7/8 to 39 3/8 on negative comments from JP Morgan, which later said the selling was overdone. WebTrends
, which is being acquired by NetIQ, lost 6 to 18 11/16.
Portal Software rose 1 3/16 to 8 1/4 on an alliance with Siebel Systems
.
An earnings warning from Texas Instruments weighed on chip stocks, as did more negative comments from Salomon Smith Barney analyst Jonathan Joseph, who called the peak in the semi cycle last July. Broadcom
dropped 7 1/2 to 61 15/16.
Research In Motion surged 3 15/16 to 44 15/16 on a deal with British Telecom’s Cellnet.
Yahoo slipped 7/16 to 25 after analysts lowered revenue estimates.
B2B stocks were strong on positive comments from Merrill Lynch about Commerce One , which added 1 1/8 to 22 5/8. i2
surged 3 13/16 to 33 3/8, and Ariba
tacked on 9/16 to 18 1/4.
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 has tried to reverse the last two days, but so far hasn’t had much success. On the other hand, sellers and shorts aren’t showing much conviction below 2300, the level where the Fed first cut interest rates. That’s not surprising, given that the threat of more surprise cuts looms as long as the Nasdaq trades below 2300; once bitten, twice shy, as they say. So the Nasdaq is trapped in a tight range here. We suspect it will reverse upward for at least a trading rally here, but we need to see buyers come in above 2300 for that to happen. 2300 would take out a downtrend line from January 31 (first chart), and could give the index room to about 2430 or so. That would likely set up a test with the 1990 logarithmic trendline (second chart) at about 2388 (that line will be at about 2430 next month), and the September
1 downtrend line at about 2400 (third chart). To the downside, the recent lows at 2150-2200 should hold, and below that, buyers should be found at about 2050.
The S&P 500 needs to get back above its December closing lows of 1265, and then its September downtrend line around 1290, to be restored to technical health (both levels in the chart below). To the downside, 1225 is likely to be strong support, if the index gets that low.
The Dow is taking out resistance at 10,500, but a more important resistance level is 10,600-10,650. Critical resistance is 11,000; the Dow Transports must get back above 3000 and stay there, and the Dow must close above 11,007 to get an all clear signal under Dow Theory. The Transports are coming back nicely, up to 2966 today. To the downside, 10,300 is important support on the Dow, but the index could go as low as 10,100 without a major technical breakdown.
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