Retail Sales, Tech Earnings Boost Stocks

Stronger than expected retail sales and technology earnings boosted stocks on Wednesday.

The ISDEX gained 2 to 161, and the Nasdaq rose 24 to 1859. The S&P 500 climbed 11 to 1118, and the Dow gained 125 to 9989. Volume rose to 1.2 billion shares on the NYSE, but declined to 1.5 billion on the Nasdaq. Advancers led 19 to 11 on the NYSE, and 20 to 14 on the Nasdaq.

After the close, Hewlett-Packard beat estimates, and Brocade met estimates.

During the day, Network Appliance , Overture , eSpeed and Applied Materials all surged on better than expected results, even though Applied Materials said business conditions remain difficult, and Lehman Brothers said AMAT stock is richly valued.

S1 slipped despite better than expected results.

Juniper Networks fell on worries that the company will guide lower.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the story link at the top of the newsletter.

The Dow (first chart) was stopped at its main downtrend line today, but didn’t quite get to the upper trendline of its broadening pattern, which should be at about 10,020 or so tomorrow; if it can power through that, the 200-day moving average at 10,075 is next, and then 10,120-10,130. 9906-9940 should now be support. The S&P 500 (second chart) cleared 1118 resistance. 1130-1135 is possible if it can clear 120.56. Support is now 1110-1114, 1107 (particularly important tomorrow) and 1098. The S&P 100 (third chart) sure looks like a potential head and shoulders top following the recent broadening top that comprised the head; 574 is critical resistance on that index, about 1% up from here. With all these bearish patterns – broadening tops, potential head and shoulders tops – it sure would be something else if the market can head much higher from here. The Nasdaq (fourth chart) is the weakest-looking index here. It looks like it may be forming a bear flag or pennant the last few days, and the declining volume supports that possibility. 1860-1880 is very tough resistance, and 1834-1844 is important support. If that goes, 1700-1720 is possible to the downside. NYSE volume rose today, which is a plus for the bulls, but Nasdaq volume declined and internals on both exchanges were unimpressive. GE looks worrisome here (check out the falling volume on this rally), as do the bank stocks, and investor sentiment remains too bullish. In short, the picture appears to favor the bears here, but another 1%-2% is possible to the upside, particularly if the Dow can clear 10,020 tomorrow.

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