The Bulls Keep On Running

The market logged another day of strong gains on Thursday, and Microsoft extended the party after the close.

The Nasdaq rose 39 to 1272, the S&P 500 gained 19 to 879, and the Dow surged 239 to 8275. Volume rose to 1.78 billion shares on the NYSE, and 1.82 billion on the Nasdaq. Advancers led 22 to 10 on the NYSE, and 24 to 9 on the Nasdaq. Upside volume was 71.5% on the NYSE, and 87.8% on the Nasdaq.

After the close, Microsoft rose after beating and raising estimates. PeopleSoft beat and raised estimates; Siebel missed; Check Point and eBay warned; Advanced Fibre beat estimates; Scientific Atlanta missed big; Sun and Nortel matched estimates; and UTStarcom beat estimates.

During the day, IBM , QLogic and Symantec soared on better than expected results.

Sandisk , WebEx , Cerner , Extreme Macromedia and E*Trade also surged on their earnings reports, but Apple Computer slipped after warning.

Nokia and SAP also soared on better than expected results.

EMC slipped despite meeting estimates.

Yahoo lagged on a valuation downgrade.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the story link at the top of the newsletter.

Another follow-through day for the market, so we’ve now had back-to-back 80% upside days last week followed by two follow-through days this week (2% gains on higher volume than the day before). Clearly the trend favors the bulls at present, but the market is overbought and approaching resistance, so a pullback should begin soon. The relatively low (71.5%) upside volume on the NYSE is a potential sign of waning momentum. The Dow (first chart) and S&P (second chart) are nearing their May downtrend lines, at about 8400 on the Dow and 890 on the S&P. A gap over those lines could give this rally even more room to run, but the odds favor a pullback from those levels. 8270 and 860-877 are first supports, and 8050-8100 and 850 are critical supports. (Note: We’ve added a new indicator to the charts, the 5,5 stochastic, for shorter-term signals in addition to the trend indicators MACD and ADX.) The Nasdaq and Nasdaq 100 (third and fourth charts) clearly have room to run, but they too are overbought. 1296-1300 is Nasdaq resistance. 1260-1268 and 1220 are Nasdaq supports, and 937 and 900 are support on the Nasdaq 100.





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