Stocks Gain, Flirt With Key Levels

Stocks rose on Thursday, once again flirting with key resistance levels.

The Nasdaq out performed, up 48 points to 3845, and the ISDEX rose 3 to 728. The Dow rose 26 to 10,714, and the S&P 500 closed up 8 points to 1478, just below the key 1480 level. Volume rose to 993 million shares on the NYSE, where the advance-decline line was even. Nasdaq volume rose slightly to 1.42 billion shares, with decliners leading 21 to 18.

On a triple-witching Thursday, investors shook off concerns about Qualcomm’s business outlook, strong May industrial production, and hawkish comments from a voting Fed governor. Industrial production gained a strong 0.4% in May; analysts had expected a decline. Oil prices remained a concern ahead of next week’s OPEC meeting and a breakout in prices earlier this week.

Red Hat rose 15/16 to 23 7/16. After the close, the company reported a loss of 2 cents a share, 2 cents better than analysts expected. Revenues almost doubled, to $16 million. The stock rose to 24 3/8 in after-hours trading.

IDT Corp. rose 3 5/16 to 31 1/2 despite disappointing Wall Street with a 12-cent third quarter loss, 20 cents less than analysts expected. Traders focused on a $3 one-time gain from the sale of Net2Phone stock . Shares of Net2Phone climbed 1 3/8 to 38 1/8.

Digital River fell 2 1/2 to 7 3/4 after warning that second-quarter revenues would be below estimates, but that the company expected to meet or exceed the 40-cent-per-share loss estimate. Analysts got an early indication that something was amiss at yesterday’s Bear Stearns technology conference. BroadVision gained 1 to 49 7/16 after the company said it was comfortable with and could exceed estimates at the Bear Stearns conference this morning.

Shares of CDNow fell 1 3/32 to 3 3/16 after saying the firm may miss the June 30 goal it had set for finding a merger or investment partner, and that any offer may be below the current stock price.

Open Market fell 1 41/64 to 15 27/32 after three class action lawsuits were filed claiming false and misleading statements by the company. The maker of e-commerce software had seen its shares drop 73 percent since early March. For more on the story, click here.

Homestore.com rose 2 to 31 7/8 on rumors that it might be an attractive acquisition target for America Online or Yahoo! . The stock was recommended this week by Merrill Lynch axe Henry Blodget. AOL rose 1 13/16 to 54 7/16; the stock is being added to the S&P 100.

Internet infrastructure plays were strong. SDL Inc. soared 19 11/16 to 291, Corning gained 9 3/4 to 248 3/4, Juniper Networks climbed 4 7/16 to 231 1/16, Redback Networks gained 3 1/2 to 117, and JDS Uniphase rose 3 11/16 to 120 11/16.

Priceline.com fell 7/16 to 42 3/4 after trading as high as 45 13/16, after a Goldman Sachs upgrade and comments that shares coming out of lock-up were not a concern.

Shares of DoubleClick , under siege lately on concerns over declining Internet advertising spending, fell 2 15/16 to 39 1/2, below support at 40. The stock traded as low as 37 3/16, below its next support of 38, but the stock’s chart pattern suggests it could eventually go to the low 30s.

Shares of yesterday’s hot IPO, Rediff.com India , soared 6 5/8 to 25 15/16.

Exodus Communications gained 4 23/32 to 93 3/32 after Prudential initiated coverage witha

Strong Buy and a price target of $149. USinternetworking rose 1 13/16 to 20 5/16, also on a Prudential Strong Buy and price target of $42.

E*Trade , up 9/16 to 17 3/16, and Ameritrade , down 1/8 to 12 3/8, were mixed after CS First Boston lowered estimates due to lower trading volume, but said prices relative to accounts are at their lowest level since October 1998. Separately, E*Trade said it will acquire Versus Technologies for $174 million.

Shares of Rare Medium rose 1 15/16 to 21 9/16 on news of an alliance with Microsoft to deliver business-to-business and business-to-consumer e-commerce solutions to clients.

Shares of eBay , up 1 5/16 to 64 1/16, and Network Appliance , up 3 9/16 to 79 3/16, recovered a day after the two sold off on acquisition announcements.

Cisco rose 1 3/8 to 66 9/16, breaking through resistance around 65.

Some technical comments on the market: What an exciting day. The indices went right up to their resistance levels (10,766 Dow, 1480 S&P 500, 3850 Nasdaq) before turning back. Despite today’s action, this is still one tough market to call. It is winding up in a pretty tight trading range; this could imply that we are getting ready for a big move. However, clues as to which direction that will be in are scarce. I’d watch the boundaries of our trading range and play the breaks; within those ranges, you’re likely to get whipsawed. That means we’re looking for a break of 3700 or 3900 on the Nasdaq; 10,500 or 10,750-10,800 on the Dow; or a convincing move above 1480 on the S&P 500 (SPX). The Nasdaq and SPX resistance numbers are probably the most important here. The good news is that we are consolidating just beneath some important levels, and could be forming bullish cup-and-handle formations on the Nasdaq and SPX. The bad news is that those same formations could also be viewed as the bulls tiring and getting ready to roll over, and we are in the process of a bearish moving average crossover on the Nasdaq. The only formations that give anything away are our bearish “diamond” formations in the weekly Dow and SPX charts, which appear rarely, and then usually only before a bear market. There’s also a bearish descending triangle developing on the Dow, with an upper boundary in the 10,750-10,800 range.

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