Stocks Follow Through

Stocks surged in high volume on Tuesday, but WorldCom fell on record volume on news that it will be dropped from the S&P 500. Applied Materials beat estimates after the bell, but Hewlett-Packard missed.

The ISDEX surged 7 to 129, and the Nasdaq soared 66 to 1719. The S&P 500 gained 22 to 1097, and the Dow climbed 188 to 10,298. Volume surged to 1.42 billion shares on the NYSE, and 2.55 billion on the Nasdaq. Advancers led 22 to 9 on the NYSE, and 24 to 11 on the Nasdaq.

After the close, Applied Materials , BEA Systems , Brocade , Computer Associates and Computer Sciences beat estimates, Hewlett-Packard missed, and Network Appliance matched estimates but warned.

During the day, WorldCom fell 14% on a stunning 670 million shares, double previous single-day records, on news that the stock will be dropped from the S&P 500.

Taking the stock’s place in the S&P will be Apollo Group , parent of University of Phoenix Online .

Dell gained 6% on Merrill Lynch comments that the company should beat estimates when it reports on Thursday.

Extreme Networks surged 13% on an upgrade.

Flextronics gained 9% on a $1.5 billion three-year deal with Casio.

QLogic and Cisco followed through on last week’s big gains.

eSpeed fell 11% despite beating estimates.

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.

A follow-through in higher volume today, so the rally is very much alive. The negatives here are the extremely low put-call ratio, which closed at .52 today, showing lots of call buying and complacency; and Max-Pain on the QQQ – the point where most options expire worthless – is 32, more than 1% lower than today’s close. That suggests that the market could consolidate or pull back before the week is out. The S&P 100 (first chart below) is just under the very critical 548 resistance level; above that the index, and the market, could run. The S&P 500 (second chart) broke its downtrend today and closed right under 1100 resistance; above that looks like a clear shot to 1120. 1094 looks like very important support here, although a spike down to 1091 isn’t out of the question. The Nasdaq (third chart) is just below 1724-1733 resistance, and 1757-1770 is major resistance. Support should now be 1696. The Dow (fourth chart) is back at a very tough resistance zone between here and 10,550. Support can be found about every 50 points starting at 10,250, and 10,000 is critical support.




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