Traders shook off an earnings warning from Oracle on Friday to stage a modest rally.
The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 1 to 278, and the Nasdaq was unchanged at 2184, 92 points off its low. The S&P 500 added 6 to 1247, and the Dow climbed 97 to 10,547. Volume declined to 517 million shares on the NYSE, but rose to 988 million on the Nasdaq. Advancers led 16 to 13 on the NYSE, but decliners led 17 to 13 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.
The Michigan consumer sentiment survey showed a slight uptick, the second straight day that economic indicators revealed a slight improvement.
Oracle fell 3 11/16 to 17 11/16 after warning that earnings will come in 2 cents light of estimates at 10 cents a share. The company said orders were just being postponed due to the economy. A host of software stocks were hit by analyst downgrades on the news, among them Vignette
, off 7/16 to 5 15/16, Siebel
, down 5 1/16 to 39 9/16, i2
, off 2 5/8 to 24 15/16, Commerce One
, down 1 1/2 to 16 9/16, Art Technology
, down 2 9/16 to 25 3/4, and E.piphany
, off 1 15/16 to 14 3/4.
Ameritrade rose 23/32 to 8 31/32 to on reports a top Merrill Lynch official may become the company’s CEO.
Sapient fell 2 1/16 to 10 15/16 on an earnings warning.
Yahoo lost 1 to 23 3/8 after adopting a shareholder right plan to fight hostile takeovers. The company said there have been no efforts to take over the company. Salomon Smith Barney speculated that Yahoo could merge with eBay
, which rose 1 15/16 to 39 7/16.
Broadcom rallied 2 11/16 to 50 11/16 despite more lowered earnings estimates from analysts.
eBenX slipped 15/16 to 4 13/16 on news that its relationship with Verizon will end at the end of the year. eBenX said its financial outlook will not be affected.
Cisco was a weak sign for the Nasdaq, falling 1 3/16 to 23 5/16.
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
Some very nice signs here at very critical supports: the Dow, S&P and Nasdaq may have all formed higher lows at the major support levels of 10,292, 1215 and 2070, respectively. The semiconductors, cyclicals and Transports are leading to the upside, all signs of early buying pressure. This is the third time in a week that the indexes have tried to reverse, a sign of support, but so far buyers have failed to come in at higher levels. The Dow must close above 10,650, the S&P above 1275, and the Nasdaq above 2320 for any sort of a bottom to be considered in place.
The Nasdaq may be trying to reform its 1990 logarithmic trendline at 2070 (first chart), a big plus. That line again provided strong support today, but the index has been headed straight down since breaking its true 1990 trendline at 2388 10 days ago. Can it reverse? We need to see a close above 2320 to call even a minor bottom here. The 2028 level was also the July 1998 peak (second chart); old tops make good bottoms, and that was a major peak for the Nasdaq. To the upside, 2250-
2300 is first resistance. Note the downtrend lines from September in the third chart; they indicate potential resistance at 2250 and 2350.
The S&P 500 once again held critical support at its recent bottom of 1215. To the upside, 1245-1254 is first resistance, and above that the index must get back above 1275, the early January low and the September downtrend line (all levels in the first chart below). It is also interesting to note that the S&P 500 came within 2% of 1190, its July 1998 peak (second chart), lining up nicely with the Nasdaq.
The Dow once again held 10,300 support; a close below 10,292 could lead to a retest of the index’s lows in the 9600-9700 area, although 10,200 or so could also provide support. To the upside, the Dow must get back above 10,650 on a closing basis to have a positive bias. The Dow Transports are back above 2900, a good sign. To the upside, the Transports must get back above 3000.
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