Stocks Soar On Microsoft Earnings

If you don’t like the stock market, just wait a day. A day after recovering from a steep plunge, stocks soared Thursday on better-than-expected earnings from Microsoft.

The ISDEX surged 25 to 632, and the Nasdaq soared 195 to 3367. The S&P 500 climbed 35 to 1377, and the Dow rose 103 to 10,078. Volume declined to 600 million shares on the NYSE and 1.1 billion on the Nasdaq. Advancers led by 17 to 9 on the NYSE and 25 to 10 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

B2B stocks struggled despite Ariba’s break-even quarter that beat estimates by 5 cents. The only possible negative in the report was that deferred revenue growth slowed from previous quarters, from about 80% to 30%. The stock lost 7 1/8 to 119 15/16. i2 dropped 5 7/8 to 173 1/8, but Commerce One , which reports earnings tonight, rose 1 1/8 to 60 5/16.

America Online lost 2.46 to 44.42 despite beating 13-cent earnings estimates by a penny. Merrill Lynch analyst Henry Blodget said he couldn’t raise estimates on the company for the first time in years because of a flat advertising backlog and a decline in deferred revenue, both due to the difficult dot-com environment.

But all but a handful of ISDEX issues traded higher, led by E*Trade , which rose 2 1/16 to 13 1/2 after beating estimates by 2 cents with 2-cent earnings. BroadVision climbed 1 11/16 to 26 7/16 after 5-cent earnings beat estimates by a penny. Phone.com surged 13 7/16 to 97 1/8 after it and merger partner Software.com blew away estimates. Broadcom advanced 15 5/8 to 225 after its 30-cent earnings beat estimates by 6 cents.

Akamai gained 8 1/2 to 48 7/8 after beating estimates by 7 cents with a 60-cent loss.

Efficient Networks soared 6 3/8 to 34 7/8 after beating estimates by 9 cents with 10-cent earnings. Avanex soared 28 7/16 to 118 7/16 on better-than-expected earnings. But Avici Systems slipped 3 3/16 to 68 13/16 on a better-than-expected loss. Extreme Networks , off 15 1/8 to 92, and Tut Systems , down 6 15/16 to 30 1/2, both beat earnings estimates.

Multex.com gained 1 1/8 to 13 on its first profitable quarter.

Webvan slipped 3/8 to 1 3/16 on a Prudential Sell rating, based on cash burn concerns and the fact the company’s Oakland facility is only operating at 30% capacity in a very Web-savvy area. Women.com dropped 15/32 to 1 9/32 on an earnings warning.

Allaire slipped 3/4 to 6 3/4 after meeting lowered estimates.

Some technical comments on the market: Note: We are now including charts with the technical market commentary; just click on the links in the story below to go to them. If you have trouble accessing the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

A good day, but we need a strong finish this afternoon to put in a bottom. First, one last look at yesterday’s action. We mentioned significant positive divergences in favor of technology and Internet stocks. Here’s what we meant: at least 4 or 5 technical indicators such as MACD made higher lows when the Nasdaq made a lower low than it did last week. Look at the indicators in the bottom of this < a href=http://www.wsrn.com/images/AHT/compx1019d.gif>chart to see what we meant; at least two other indicators also made positive divergences. Also, the S&P appears to have filled a gap from October 1999 yesterday at about 1300. Interesting that the Nasdaq’s gap from that same day at 2900 has yet to be filled, probably because it was on a breakout to knew highs. The negatives yesterday were the weak finish and lousy market internals; no divergences there.

The Nasdaq is just under its September downtrend line at about 3400. A break above that level could give the index room to as high as 3800. Major resistance could be found at 3500, around the August 3521 bottom and the 38% Fibonacci level from the 4259 to 3026 decline. To the downside, the triple bottom around 3050 (3042, 3054 and 3026) is critical support.

The S&P 500 is back above its 1994 logarithmic trendline at about 1350, a very important level. A close below 1323, or 2% below the 1994 trendline, would be a big negative. To the upside, the S&P’s downtrend line is around 1380, right where we are now. We’ve turned back several times in this area, so we need to get through it to have room to run.

The ISDEX is once again back above its September downtrend line around 625. Next resistance is 650 and then 700. The Dow held its 1994 linear trendline with about 100 points to spare yesterday. To the upside, the index needs to get back above 10,089, its close of two days ago, and then take out its September downtrend line around 10,200 to have any room to run. The Dow looks weaker than the other indexes, and we would not rule out another trip to the 9700 area in the months ahead. The Nasdaq looks strong at 3000.

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