Stocks climbed the proverbial wall of worry today, ignoring an impending ruling in the Microsoft antitrust case and more jawboning from the Fed, which seems intent on curbing investor enthusiasm.
The Dow gained 77, the S&P 500 gained 13 and the Nasdaq rose 82 on declining volume. The Dow and Nasdaq ended just shy of key levels. Internet stocks were particularly strong. The ISDEX gained 38 to 768. Advancers led decliners 16 to 13 on the NYSE and 23 to 17 on the Nasdaq. Volume was 843 million on the Big Board and 1.4 billion on the Nasdaq.
After the close, Judge Thomas Penfield Jackson ordered that Microsoft be broken up into two companies, an operating system company and an applications company. The stock rose in after-hours trading.
Linux play Red Hat rose 3 11/16 to 24 3/4 in advance of the Microsoft
decision. However, the stock fell two points in after-hours trading.
MP3 soared 4 7/8 to 16 1/2 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 3/4 to 63 1/16. The tech bellwether fell yesterday after failing to break its downtrend line above 64, and could be forming a bearish pennant pattern. 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 2 9/16 to 19 11/16. Prudential on Tuesday initiated coverage with a Strong Buy rating and a price target of $48.
Juniper Networks gained 24 3/8 to 225 3/4, finishing at the highs of the day. Nortel Networks
is considering marketing Juniper’s Internet routers instead of its own, the Wall Street Journal reported.
Ariba gained 5 3/8 to 80 3/4 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 10 3/4 to 146.
Netegrity gained 2 1/2 to 63 1/2 after the provider of e-commerce infrastructure solutions for secure portal management announced a strategic partnership with Vignette
.
Interwoven gained 6 11/16 to 76 5/8 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 2 1/4 to 19 1/8 after DLJ made it a Top Pick with a $31 target price. Ameritrade
, which received a buy rating, rose 13/16 to 13 3/8.
Yahoo! gained 9 9/16 to 144 5/8 after being added to Morgan Stanley Dean Witter’s Model Portfolio. eBay
gained 3 13/16 to 75 3/4.
Amazon.com rose 1 7/32 to 51 13/16, ending a two-day slide after a Barron’s article said the company could be hurt if forced to change its accounting practices.
NaviSite rose 5 15/16 to 54 15/16 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 3/4 to 44 3/4 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 9 1/4 to 37 1/4. The company was rumored to be close to receiving a vital round of financing.
Healtheon/WebMD took a breather from its recent run, down 1 1/8 to 18 15/16.
InfoSpace.com rose 6 to 55 3/4 after Merrill Lynch analyst Henry Blodget reiterated a Buy rating on news that the company was awarded a contract by Alltel
. Blodget called INSP the leading wireless operating platform and a core holding in the Internet infrastructure space.
Digital Island soared 7 1/8 to 32 3/8 receiving a Strong Buy rating and a price target of $65 from Wedbush Morgan.
Extended Systems continued its run after a recent contract win, up 14 3/8 to 64 7/8.
RMI.net gained 1 9/16 to 5 after being chosen by AT&T for a trial of a cable Internet service over a hybrid fiber-coaxial network. Other companies selected included AOL, Excite@home, Mindspring, MSN, WorldNet and Yahoo!.
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 3717-3725 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. Interestingly, both the Dow and the Nasdaq finished today just under key levels: the 38% retracement level for the Nasdaq (3840), and the 50- and 200-day moving averages for the Dow (10,820), where the average turned back yesterday. 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 also appears to be forming a descending triangle, a bearish sign. The good news is that we finally have improvement in the advance-decline lines on both the Nasdaq and NYSE.
