Stocks bounced Friday despite continued accounting worries at JP Morgan, Computer Associates and other companies.
The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped fractionally to 143, and the Nasdaq gained 8 to 1724. The S&P 500 rose 8 to 1089, and the Dow gained 133 to 9968. Volume rose to 1.4 billion shares on the NYSE, and 1.83 billion on the Nasdaq. Advancers led 19 to 11 on the NYSE, and 19 to 15 on the Nasdaq.
Computer Associates fell another 15% after confirming an SEC investigation into the company’s accounting practices.
Xilinx rose 3% after raising guidance. BEA
fell 6% despite beating estimates, and Serena
dropped 10% after guiding lower.
eBay fell 3% on concerns about fraud by the auction site’s users.
PayPal fell to a new low on worries about profitability and competition from eBay.
Cisco and IBM
both managed gains despite recent comments from both that the tech environment remains difficult.
Qualcomm managed to close up on the day after breaking 32.50 support.
Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.
This two-month correction has set up some very interesting Fibonacci time relationships for early next week. The January 7 peak came 21 trading days after the December 6 peak; 21 is a key Fibonacci number. The next important Fibonacci numbers are 34 and 55. Monday is 34 trading days after the January 7 peak, and 55 days after the December 6 peak. That makes the next couple of days worth watching for a hint on near-term direction. We think the market may head down again early next week, in part because the Dow (first chart) may be forming an Elliott wedge, which means that it could top out just over 10,100 on Monday or Tuesday, and then head down into March to 9200-9400. It’s hard to imagine the Dow getting that high, with Cisco’s stealth warning yesterday, mounting accounting concerns, and lousy internals for a triple-digit gain. 10,000 is first resistance, and then 10,050, and 9900 is first support and 9800 is critical support. 9800 is critical for other reasons as well: it is estimated to be the average cost of the Dow futures that expire on March 14. A break of that level over the next few weeks could lead to significant selling by large investors and index arbitrage traders. The S&P 100 (second chart) continues to sit right above critical 544 support; if that goes, a retest of the September lows would essentially be under way, because that chart would predict minimum downside to 490. Not to be all negative today, the Nasdaq (third chart) formed a doji and could reverse upward on Monday. Again, we’re not sure if it has more than a day or two to the upside, and 1760-1772 looks like very tough resistance. 1745 is first resistance, and 1673-1690 is first support, with 1650 and 1619-1640 below that. The S&P 500 (fourth chart) once again bounced at 1075-1080 support. 1065 and 1052 are below that. 1085-1088 is first support, and 1098 and 1104-1107 are resistance.
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