With another Federal Reserve meeting out of the way, stocks spent Wednesday morning searching for direction.
The ISDEX gained 6 to 788, and the Nasdaq added 8 to 3966. The S&P 500 climbed 3 to 1501, but the Dow lost 22 to 11,116. Volume rose to 390 million on the NYSE and 665 million on the Nasdaq. Decliners led 13 to 11 on the Big Board and 19 to 15 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.
Inktomi climbed 6 11/16 to 118 5/16 on news of a deal with America Online
to create an up-to-date information delivery platform called Content Bridge. The alliance also includes Exodus
, off 13/16 to 63 1/4 and Digital Island
, down 3/8 to 26 5/16. Notably absent from the alliance was Akamai
, which lost 2 5/16 to 69 5/16.
i2 Technologies rose 4 to 149 3/8 on news of deals with DaimlerChrysler, Toyota and Volkswagen.
CMGI gained 2 9/16 to 40 5/16 on news of an agreement with the New England Patriots to name the team’s new stadium “CMGI Field.”
Quokka Sports gained 1 5/8 to 8 3/8, but down from a high of 10, on news of an investment from GE unit NBC.
DSL.net continued to soar on news of an alliance with IBM
, gaining 2 1/2 to 8 23/32.
Stamps.com gained 1 9/16 to 5 1/8 on news that the company’s Internet postage technology will be included in Intuit’s
Quicken personal financial software.
Sapient fell 6 55/64 to 109 1/2 despite Goldman Sachs reiterating Recommended List on the firm. Priceline.com
added 1/16 to 24 13/16, a rather lukewarm reception for a Salomon Smith Barney Buy rating and $130 price target. The firm said it sees upside potential for the third quarter based on new growth categories.
24/7 Media slipped 27/32 to 11 31/32 after trading as high as 13 on news of an expanded partnership with chinadotcom
.
Some technical comments on the market: The market turned back at an interesting juncture yesterday: the Nasdaq 100 and the S&P 500 both turned back where their bearish rising wedges met their downtrend lines from their April peaks. Pretty potent resistance points: when an index or stock rises in a weak formation to a major downtrend line, the odds of clearing the downtrend line are not high. The S&P slightly pierced its downtrend line before turning back. The Nasdaq is also at a similar juncture, but the index could rise as high as 4050-4100 before running into its downtrend line. Also yesterday, the Nasdaq and Nasdaq 100 and the S&P 500 and 100 all formed “inverted hammers” or “gravestone doji,” patterns where the indexes rise strongly only to finish essentially unchanged; potential reversal patterns. None of this means we have to get a huge sell-off here, but it looks like the rally has probably been capped. Strong moves above 11,200 on the Dow, 1512 on the S&P 500, 825 on the S&P 100, 3900 on the Nasdaq 100 and 4100 on the Nasdaq would convince us otherwise. A decline below 1490, where the S&P 500 found support this morning, could carry the S&P 500 back to the 1450-1460 range.
As we’ve said, the Nasdaq (and the Nasdaq 100) may be forming a bearish flag or pennant pattern in the daily chart since bottoming at 3521 two weeks ago, giving the Nasdaq potential for more downside, as much as 600 points. A break much below 3850 would be a warning sign. However, a flag or pennant pattern has at most three weeks to form, so if the Nasdaq can avoid a sell-off for th
e rest of the week, we have some hope here. The ISDEX also may be forming a bearish flag pattern here, signaling potential further downside on that index. Key resistance is now around 810, the lower boundary of a broken bearish rising wedge, although the index is running into old resistance around 790. Support on the ISDEX is at 693-700, 650 and 600; a break below 700 would just about break the bearish flag pattern. The Dow needs to stay above the 10,950 area to preserve the upside breakout of the diamond formation, and so far it has done that. Resistance on the Dow is just under 11,200; the index turned back yesterday at 11,189.
