Stocks Rise In Quiet Trading

Stocks rose modestly on Monday in quiet trading, as volume dried up to its lowest level in more than a month.

The ISDEX gained 9 to 736, and the Nasdaq gained 3 to 3793. The S&P 500 rose 2 to 1474, while the Dow added 10 to 11,038. Volume declined to 332 million shares on the NYSE and 516 million on the Nasdaq. Advancers led 13 to 12 on the NYSE, but decliners led 18 to 17 on the Nasdaq. The big economic report for the week is Wednesday’s Consumer Price Index. For earnings reports, visit our earnings calendar and reported earnings.

Value America was halted at 23/32 on news that the online retailer filed for Chapter 11 bankruptcy. The company is discontinuing its e-tailing operations and reducing staff, and will focus instead on its electronic services business.

Several leading Internet companies announced acquisitions. Aether Systems fell 6 1/2 to 142 15/16 after announcing plans to acquire wireless software firm Cerulean Technology for $150 million in cash and stock. Broadcom rose 8 7/16 to 233 1/2 on news that it will acquire privately held NewPort Communications for $1.2 billion. Red Hat gained 1 13/16 to 21 7/8 on news that it will acquire privately held C2Net Software for 1.99 million RHAT shares. GoAmerica gained 3/16 to 8 1/4 on news that it will acquire Hotpaper.com in a cash-and-stock deal worth about $10 million.

eBay fell 15/16 to 47 9/16 on a Barron’s article that said the growth of the company’s core auction business may be slowing.

Commerce One slipped 1/8 to 50 after trading as high as 53 resistance on news the firm will be a key developer of an online metals marketplace, along with Germany’s SAP. i2 Technologies slipped 5/8 to 146 5/16 after testing 150 resistance.

VA Linux rose 1 15/16 to 41 15/16 on a CS First Boston Buy rating and $65 price target.

Kana Communications gained 3 1/4 to 36 3/16 on news of an alliance with Cisco Systems .

RMI.net gained 5/32 to 2 29/32 after reporting a 39-cent second-quarter loss. VitaminShoppe.com also reported a 39-cent loss, 3 cents better than estimates, and the stock rose 1/4 to 1 3/8.

Buy.com lost 3/16 to 2 25/32 on a PaineWebber Neutral rating and $3.60 price target.

marchFIRST gained 2 7/16 to 20 1/16 on news of a deal with Autoland.

Some technical comments on the market: A very interesting situation on the Dow. We had a small upside break of the bearish diamond pattern on Friday, a big plus. But here’s the problem: it came on the lowest volume in more than a month, making the breakout suspect; volume is particularly important on an upside breakout. And almost every indicator on the Dow is overbought: stochastics, MACD, RSI, etc. A tough call, but we’re going to come down on the side that the diamond is still intact. Volume was too low, and on a basic weekly chart, the integrity of the pattern is still intact. The only way to clearly see the breakout is on a year-to-date daily chart, which is not the traditional timeframe for viewing the pattern in (the weekly chart). That said, a high-volume move above Friday’s and today’s high of 11,070 would cause us to become much more positive on the move. A pullback much below 10,975, say below 10,950, would confirm that the pattern is still intact. It’s going to be an interesting week for the old economy stocks, with Home Depot reporting earnings tomorrow and Hewlett-Packard on Wednesday.

The Nasdaq appears to be stuck in a narrowing trading range, and has yet to establish firm direction either way. The index may be formin

g a bearish flag pattern in the daily chart since bottoming at 3521 recently, giving the index potential for more downside. The index has struggled around 3800 resistance the last two days. The ISDEX also may be forming a bearish flag pattern here, signaling potential further downside on that index. Key resistance is now around 790, the lower boundary of a broken bearish rising wedge. Support on the ISDEX is at 693-700, 650 and 600; a break below 700 would just about break the bearish flag pattern. The S&P continues to struggle 1480-1490 resistance. Support can be found at 1450-1460 and 1434-1440. Critical support on the S&P is 1390, the index’s October 1998 uptrend line. A break of that trendline could carry the S&P to 1170 or lower, so we do not want to violate that line.