Stocks Await Microsoft Ruling

Stocks treaded water on Tuesday as traders awaited the judge’s ruling in the Microsoft antitrust case, expected to be issued after the markets close at 4:30 p.m.

The Dow gained 9, the S&P 500 gained 6 and the Nasdaq rose 17 on light volume. The ISDEX gained 7 to 737. Advancers led decliners 13 to 12 on the NYSE and 18 to 17 on the Nasdaq. Volume was 380 million on the Big Board and 626 million on the Nasdaq.

Linux play Red Hat rose 2 1/8 to 23 3/16 in advance of the Microsoft decision. Judge Jackson is expected to order the breakup of the software giant. Electronic copies will be available here.

MP3 soared 3 5/16 to 14 15/16 on a Wall Street Journal report that said the online music company could be close to settling its copyright infringement case with Time Warner .

Cisco recovered 1 3/8 to 62 11/16. The tech bellwether fell yesterday after failing to break its downtrend line above 64. Each recovery in the stock since it peaked at 82 in April has stopped at a 62% retracement, including the most recent move from 72 to 50, where the stock has strong support.

24/7 Media continued its strong run, gaining 3 to 20 1/8. Prudential on Tuesday initiated coverage with a Strong Buy rating and a price target of $48.

Juniper Networks gained 11 3/4 to 213 1/8. Nortel Networks is considering marketing Juniper’s Internet routers instead of its own, the Wall Street Journal reported.

Ariba gained 3 to 78 3/8 after signing a deal with IBM and I2 Technologies to create a major e-commerce marketplace called E2Open.com for the computer, electronics and telecommunications industries. Shares of WebMethods continued their run, gaining 6 1/4 to 141 1/2.

Netegrity gained 2 9/16 to 63 9/16 after the provider of e-commerce infrastructure solutions for secure portal management announced a strategic partnership with Vignette .

Interwoven gained 6 3/16 to 76 1/8 after Dain Rauscher Wessels upgraded the Web content management software company from Buy to Strong Buy and set a price target of 140.

E*Trade gained 1 13/16 to 18 11/16 after DLJ made it a Top Pick with a $31 target price. Ameritrade , which received a buy rating, rose 11/16 to 13 1/4.

Yahoo gained 3 13/16 to 138 7/8 after being added to Morgan Stanley Dean Witter’s Model Portfolio.

NaviSite rose 2 to 51 after Chase H&Q analyst David Levy made positive comments regarding the company’s quarterly results, expected to be released after the close Thursday.

About.com gained 7/8 to 44 7/8 after saying it expects to become profitable in the second quarter of next year, two quarters ahead of projections.

Troubled MicroStrategy continued its strong run, soaring 7 5/8 to 35 5/8.

Healtheon/WebMD took a breather from its recent run, down 1 3/16 to 18 7/8.

Some technical comments on the market: I said yesterday we were looking for a pullback in the Nasdaq to around the 3700 level. We pretty much completed that this morning. However, we don’t want to go lower than that, and I would set 3717 as our floor: a sharp break and close belowthat number would probably take us back to 360

0. On the upside, the 3850-3900 level is proving tough resistance, and above that is the 3950-4000 level. If the Nasdaq can break through those levels, it should complete a 50% Fibonacci move to the 4100-4200 level. However, the broader indices are still developing larger bearish patterns in the weekly charts that need to be broken to resume a new bull phase: “diamond” patterns in the Dow and S&P 500, and either a head and shoulders or diamond in the S&P 100. The Dow yesterday turned back at its 50- and 200-day moving averages and appears to be forming a descending triangle; those are bearish signs. The good news is that we finally have improvement in the advance-decline lines on both the Nasdaq and NYSE.

By Paul Shread

Stocks continue to digest gains

Last week’s exuberance in the stock market has given way to cautiousness, as traders continue to digest gains and look for clues as to the market’s next move.

The old-new economy dichotomy that fueled the Nasdaq at the start of the year resurfaced. The Nasdaq gained 35, but continued to run into resistance around the 3850 level. The Dow declined 40, while the S&P 500 gained 1. The ISDEX gained 2 to 760. NYSE volume was 429 million shares, while 685 million shares changed hands on the Nasdaq, ahead of Monday’s pace. Advancers led decliners by 14 to 12 on the NYSE and 20 to 15 on the Nasdaq.

drkoop.com gained 1 17/32 to 3 5/16, resuscitated by a sponsorship contract with webofcare.com. The stock broke out of a two-month trading range on high volume. Healtheon/WebMD continued to show technical strength, up 1 1/16 to 19 13/16.

Fatbrain.com gained 2 1/2 to 10 1/8. Barnes & Noble.com made a $20 million investment in Fatbrain unit MightyWords, and Paul Allen’s Vulcan Ventures made a $10 mln investment in the “digital marketplace for the written word.”

24/7 Media gained 2 57/64 to 18 1/4. Prudential initiated coverage with a Strong Buy rating and a price target of $48. The company also announced the acquisition of iPromotions, an incentive marketing programs company. Open Market gained 2 1/16 to 16 1/16.

Ariba began the day strong, but then took a breather after its strong recent run, down 9/16 to 79 15/16. Robertson Stephens initiated coverage of the B2B leader with a Buy rating. Ariba also announced that it had been selected by specialty metals marketplace MetalSpectrum to implement its online marketplace. B2B stocks showing strength included Fairmarket , up 8 3/4 to 63 1/2, PurchasePro , up 1 3/16 to 34 1/8 to extend Monday’s 28% gains, and WebMethods , up 9 13/16 to 128 3/8.

Webvan Group gained 1/4 to 6 1/8. Goldman Sachs reiterated its Recommended List rating after the company announced the introduction of non-grocery items such as books, consumer electronics, videos, dvds, housewares, office supplies, toys, bbq, lawn/garden, pets and flowers.

AOL gained 1 1/8 to 56 3/16 after Jeffries & Co. Internet analyst Fred Moran reiterated his “buy” rating and $110 18-month price target. He expects shareholders to approve the merger with Time Warner when they meet June 23. He expects total revenue for fiscal 2000 to grow to $6.88 billion, up 44 percent, and raised his earnings estimate to 55 cents per share, up from previous forecasts of 35 cents.

Cisco pulled back 3/8 to 62 7/8 after failing to break i

ts downtrend line.

Some technical comments on the market: I said yesterday we were looking for a pullback in the Nasdaq to around the 3700 level. We’ve pretty much gotten that. However, we don’t want to go lower than that, and I would set 3717 as our floor: a sharp break and close below that number would probably take us back to 3600. On the upside, the 3850-3900 level is proving tough resistance, and above that is the 3950-4000 level. If the Nasdaq can break through those levels, it should complete a 50% Fibonacci move to the 4100-4200 level. However, the broader indices are still developing larger bearish patterns in the weekly charts that need to be broken to resume a new bull phase: “diamond” patterns in the Dow and S&P 500, and either a head and shoulders or diamond in the S&P 100. The Dow yesterday turned back at its 50- and 200-day moving averages and appears to be forming a descending triangle; those are bearish signs. The good news is that we finally have improvement in the advance-decline lines on the Nasdaq and NYSE.

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