Stocks soared on Friday on news that the manufacturing sector grew in February for the first time in 18 months.
The ISDEX http://www.wsrn.com/apps/ISDEX/ soared 9 to 153, and the Nasdaq surged 71 to 1802. The S&P 500 rose 25 to 1131, and the Dow soared 262 to 10,368. Volume rose to 1.45 billion shares on the NYSE, but declined to 1.88 billion on the Nasdaq. Advancers led 22 to 9 on the NYSE, and 23 to 12 on the Nasdaq.
After the close, Oracle
rained on the tech parade when it issued an earnings warning, falling more than a point after hours.
During the day, Novellus
soared 14% after reaffirming guidance, and Applied Materials
followed with a 10% gain.
surged 8% to close back above its 200-day moving average at 29.23 in a generally strong semiconductor sector.
surged 13% after raising guidance.
rose 6% after denying rumors of sales force departures.
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Nice resilience by the bulls. Frankly, we should have seen this one coming: virtually all the gains in the stock market over the last few years have come on the first of each month, so keep that in mind. The Nasdaq (first chart) busted out of its main downtrend channel today and took out a secondary downtrend line too, albeit on declining volume from yesterday. Also, we have yet to see a single day since the September 21 bottom that is characteristic of major bottoms, with up-down volume of 9 to 1 and advance-declines of 3-1, and today was no exception. But as we’ve seen, even bear market rallies can go a long way, and the bulls are back in charge for now. One thing to watch on Monday is the effect of Oracle’s earnings warning; a gap back below those trendlines would be bearish. They should now be support, at about 1790 and 1760 on Monday. Today’s breakout level was just under 1780, another support to watch, and ideally the level where buyers step in. The Nasdaq did close just below an important gap at 1805.20, which is about the last resistance we see until 1850. The Dow (second chart) set a new recovery high today. It’ll be hard getting much above 10,400 on Monday, and 10,380, the 40-month moving average, is also a very important level. Also, with the options volatility indicators, the VIX and VXN, setting new lows today, sentiment may be complacent enough for a good pullback. Support is 10,250 and 10,125. The S&P (third chart) popped out of a 25-point consolidation, which gives the index upside potential to 1150. First resistance is 1132-1140, and support is 1125 and 1117-1119. The S&P 100 (fourth chart) did some damage to a head-and-shoulders top it has been forming, a potential positive if it can get above 580 and keep going. One final resistance level to keep in mind: the XMI (fifth chart), the Major Market index, a very good proxy for non-technology blue chip companies, is forming a bearish broadening top (yet another one; every single consolidation since the Sept. 21 low has been bearish, yet the bulls keep driving this market higher) and is running straight into its main down channel line. 1063 looks like a very important level on that index, double resistance about 1/2% higher from here. And on today’s economic reports: the inventory ramp up that everyone expected is here, but will demand be there when it’s finished? Those are the economic signs to watch for now.
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