Better than expected results from GE and an upgrade on IBM overshadowed the lowest consumer sentiment reading in 9 years on Friday, sending stocks to their second straight day of big gains.
The Nasdaq soared 47 to 1210, the S&P 500 gained 31 to 835, and the Dow surged 316 to 7850. Volume declined to 1.85 billion shares on the NYSE, but rose to 1.92 billion on the Nasdaq. Advancers led 25 to 7 on the NYSE, and 23 to 10 on the Nasdaq. Upside volume was 89.6% on the NYSE, and 81.6% on the Nasdaq.
IBM soared 11% on a Lehman upgrade.
RF Micro gained 19% on positive guidance.
Marvell lost 13% on concern about the company’s alliance with Intel
, which gained 7% despite an adverse patent ruling and analysts cutting estimates.
Juniper and Powerwave
fell ont ehri results, while Echeclon
gained 11%.
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A lot of downtrends busted today, and another curiosity too: it looks like the NYSE may have strung together back-to-back 80% upside days, a pretty rare event. That has historically marked the start of a good rally, per the award-winning work of Paul Desmond of Lowry’s Reports, with the notable exception of a blow-off top in November 1980. The market has yet to string together the 90% downside days that have historically marked major bottoms, but as we’ve said, an intermediate term low is possible here. That said, the market has come pretty far in a short amount of time and is likely due for a pullback. How deep that pullback goes will help determine the nature of the bottom here. If the pullback goes deeper than 7460 on the Dow, 796 on the S&P, 1148 on the Nasdaq, and 840 on the Nasdaq 100, new lows are likely. Resistance on the Dow (first chart below) is 7900, 8000 and 8217, and 7600 is an important support. On the S&P (second chart), resistance is 850-857, and 815 is important support. For the Nasdaq (third chart), the index has room to run if it can clear 1220-1222, and support is 1180 and 1163. For the Nasdaq 100 (fourth chart), support is 863-867 and 849, and resistance is 900-920 and then 960. In retrospect, our call for a cycle turn on October 9 was a pretty good one, but we are unsure as to whether we have seen the bottom. We will continue to look for clues in the days and weeks ahead.
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