Blow-out earnings from Juniper Networks sparked a strong rally in technology and Internet stocks on Wednesday. Traders ignored a warning from Intel to focus on the company’s claim that business will improve in the second half.
The ISDEX http://www.wsrn.com/apps/ISDEX/ soared 31 to 420, and the Nasdaq surged 122 to 2741. The S&P 500 rose 16 to 1343, and the Dow added 4 to 10,657, weighed down by an earnings miss from 3M. Volume rose to 620 million shares on the NYSE, and 1.3 billion on the Nasdaq. Advancers led by 16 to 10 on the NYSE, and 25 to 10 on the Nasdaq. The Consumer Price Index came in in line with expectations. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.
Intel was unchanged at 31 1/2 after beating estimates, but guiding first quarter results down 15% sequentially, much worse than analysts expected. However, traders focused on the company’s claims that business will improve in the second half of the year, and a big boost in capital equipment spending sent chip equipment stocks soaring.
Juniper soared 12 11/16 to 140 11/16 after blowing away earnings and revenue estimates and raising forward guidance. Earnings were 24 cents a share, 6 cents ahead of estimates. Applied Micro
surged 10 3/8 to 80 3/4 after beating earnings estimates but coming in light on revenues. Broadcom
rose 15 13/16 to 133 11/16, and PMC Sierra
soared 17 11/16 to 97 5/8.
Handspring added 3 11/16 to 48 9/16 after topping estimates by 9 cents with a 7-cent loss.
Support.com rose 1 3/4 to 14 1/4 after beating estimates. Ameritrade
, up 9/16 to 10 3/8, matched estimates.
VA Linux fell 1 13/16 to 7 5/16 on an earnings warning. Netopia
slipped 7/32 to 6 3/16 after missing estimates.
Allaire , up 23/32 to 8 21/32, will be acquired by Macromedia
for 0.2 MACR shares and $3 in cash for each ALLR share. Chicago Board of Options Exchange officials announced an investigation into unusual trading in ALLR options yesterday.
WebTrends fell 2 1/2 to 30 3/8 despite announcing that it will be acquired by NetIQ
for 0.48 NTIQ shares per WEBT share.
General Magic soared 15/16 to 2 31/32 on news that voice recognition partner Nuance
will power General Motors’ new voice-driven OnStar system.
Aether surged 4 13/16 to 44 3/4 on a deal with E*Trade
.
Yahoo rose 3 3/8 to 30 3/4 on takeover rumors.
NorthPoint was halted at 1 13/32 after filing for bankruptcy protection.
USinternetworking fell 1/2 to 4 9/16 after lowering forward guidance.
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The Nasdaq peaked today at the upper trendline of a new rising channel (first chart), which could mean that this rally has just about run its course. The gap up was enough to break the September downtrend lines on both the Nasdaq and Nasdaq 100 (second and third charts), which also ran into a rising
channel boundary today. It’s possible the indexes could break above those channel boundaries, but we think the indexes are more likely to take a breather in the next day or two. Opening gaps were created today at 2618.55 on the Nasdaq and 2470.72 on the Nasdaq 100. The maximum downside expected on any pullback would be to about 2400 on the Nasdaq, the lower boundary of the rising channel.
The ISDEX broke above 400 resistance today and could be headed for 450-470. However, the Nets are up 40% in a little more than a week, so we wouldn’t be surprised to see a pullback there, either. The ISDEX created a gap at 388.5 today.
The S&P 500 also took out its September downtrend line today, at about 1440.
The Dow held support 10,500 support yesterday and took out 10,600 resistance, but is once again lagging the Nasdaq and the S&P. This is the only big negative we see in this market; the sector rotation that has dominated this market since mid-1999 has yet to end well. Healthy markets move in sync, and it might take another Fed rate cut for that to happen. Critical support on the Dow is 10,300, while a close above 11,007 would confirm a new bull market under Dow Theory.
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