Technology and Internet stocks surged higher on Wednesday, as traders shook off earnings warnings from Applied Materials, JDS Uniphase and Sycamore Networks.
The ISDEX http://www.wsrn.com/apps/ISDEX/ surged 12 to 352, and the Nasdaq rose 63 to 2491. The S&P 500 lost 2 to 1315, and the Dow dropped 107 to 10,795. Volume rose to 1.11 billion shares on the NYSE, and 2 billion on the Nasdaq. But despite the gains, breadth was negative: Decliners led 17 to 13 on the NYSE, and 19 to 17 on the Nasdaq. 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.
After the close, Wireless Facilities surged 3 to 33 after topping estimates by 2 cents with 24-cent earnings.
During the day, Sycamore Networks surged 3 11/16 to 25 after beating estimates by a penny with 6-cent earnings. Forward guidance was not as bad as feared. Applied Materials
rose 5 5/8 to 46 7/8 after beating estimates but guiding future results sharply lower. Goto.com
, up 3/8 to 10 15/16, also beat estimates.
JDS Uniphase rose 3 to 41 1/2. The newly combined entity of JDSU and SDL guided estimates lower.
Openwave slipped 1/8 to 57 5/8, but 8 points off its low, after competitor Comverse Technology
won a contract from AT&T Wireless
.
Excite@Home tacked on 29/32 to 6 5/32 on a deal with AT&T
.
EarthLink rose 1/8 to 9 1/4 after Microsoft
said it is looking at ISP acquisitions now that valuations have come down.
E.piphany rose 3 9/16 to 27 3/16 on several contract wins.
S1 rose 1 to 7 15/16 despite issuing an earnings warning. USinternetworking
rose 7/8 to 3 1/8 after topping estimates. MyPoints.com
, off 1/16 at 1 3/8, and NBC Internet
, up 5/32 to 2 3/4, also beat estimates. Be Free
, up 3/32 to 2 5/8, matched estimates. Tanning Technology
, off 11/16 to 5 7/16, matched estimates but warned.
eBay , up 2 25/32 to 50 7/32, continued to rise after a bullish presentation by CEO Meg Whitman yesterday.
Ciena , up 7 1/16 to 76 1/4, reports earnings before the open tomorrow, and Dell
, up 13/16 to 23 1/16, reports after the close tomorrow.
Some technical comments on the market: Note: We are now including charts in the technical market commentary. If you can’t get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html
The Nasdaq bounced today exactly at its 1990 logarithmic trendline at 2388 (first chart), critical support for the index. Here’s a link to the biggest chart we can find of that line, taken a point above this morning’s lows: http://cache.wsrn.com/images/AHT/compx902142.gif. That line is probably the single most important support for the bull market of the 1990s, and a line we do not want to see definitively broken. A close of 2340 or so would be enough to break that line, but the index could meet with strong support at 2300, where the Fed cut interest rates for the first time last month. To the upside, the Nasdaq needs to get back above its September logarithmic dow
ntrend line at about 2525 (second chart). Today’s action at that critical support was positive, but breadth was negative, a hint of potential weakness down the road if it doesn’t improve soon. Still, the Nasdaq may have formed a higher low today, a plus.
The S&P 100 and 500 (first and second charts) broke their uptrends from December this morning, but recovered back to those lines. The repeated damage to the uptrend lines is not a terribly encouraging sign for the overall market. The S&P 500 found support at its broken September downtrend line (third chart) at about 1305 this morning, a positive, and would form a perfect inverted head and shoulders bottom if it can hold the 1300 level, with the caveat that not many of those bullish patterns have worked out lately.
The Dow closed just under its October uptrend line at 10,800 today, so all the major indexes have at least damaged their recent uptrends, a sign that the market could be range-bound if it doesn’t recover strongly. To the upside, we want to see the Dow take out 11,000 resistance convincingly, and soon. That is the upper boundary of what could be a bullish ascending triangle, with upside potential to 11,700 to 12,300. That pattern is quickly running out of room, however. A close above 11,007 would also be bullish under Dow Theory, the oldest school of technical analysis, particularly if the Dow Transports can stay above 3000; the Trannies closed tonight at 2999.49. The 11,000 level has been one tough obstacle for the Industrials, reflecting its importance to the health of the market and the economy as a whole.
Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.
