Stocks Rise On Tough Talk, Pfizer Buyback

Tough talk from SEC Chairman Harvey Pitt and a stock buyback announcement from Pfizer sent stocks higher on Thursday, but not before rumors of accounting problems at GM almost derailed the rally.

The ISDEX gained 4 to 105, and the Nasdaq rose 29 to 1459. The S&P 500 climbed 17 to 990, and the Dow gained 149 to 969. Volume declined to 1.86 billion shares on the NYSE, and 1.92 billion on the Nasdaq. Advancers led 21 to 11 on the NYSE, and 21 to 12 on the Nasdaq.

After the close, Manugistics met estimates but announced a charge, Liberate also matched estimates, and Intuit raised estimates to reflect an acquisition.

During the day, WorldCom did not reopen for trading a day after revealing accounting fraud that dwarfed that at Enron. The SEC moved quickly to file formal charges against the company, and Pitt ordered the 1,000 largest companies to begin authenticating their financial reports. WorldCom and the SEC were reportedly near a settlement late in the day.

EDS fell 14% on worries about the loss of a WorldCom contract.

NVIDIA fell 14% on a downgrade.

RealNetworks lost 18% on a warning.

Sun gained 10% on positive comments from Goldman Sachs, but Intel barely finished up on the day on negative comments from Lehman Brothers.

i2 and Vignette each surged 35%.

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.

Note: The market commentary will not be published on Friday. It will return on Monday.

Well, we definitely have a bounce here. Now the question becomes how long it will last. Ideally, the market should go back next week for a low-volume retest or a higher low before turning up; a base would likely set up a better rally. Our best guess is for a 1-2 week bounce, and potentially a choppy one at that. So far, we have neither a good bottom nor good internals on this rally, so the internals will have to improve to get that bounce. The rally could go to 9490 on the Dow (first chart) or 1013 on the S&P (second chart) and possibly further, but as you can see in those charts, several similar rally attempts ended after just a few days. In short, not the significant bottom we were hoping for, but there’s time for the picture to improve. 970-975 looks like a good target for a short-term pullback on the S&P, and maybe to 965. 9000-9100 looks like a good target on the Dow, and 1395-1412 might be a good target on the Nasdaq (third chart). 1460-1480 and 1500 are resistance on the Nasdaq, 1000-1006 and 1013 on the S&P, and 9300, 9400 and 9490-9500 on the Dow.



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