Winners And Losers

After April’s stunning gains that continued right up until late May, the Nasdaq and ISDEX somehow managed to finish the month of May unchanged.

After peaking at 2328 on May 22, the Nasdaq fell 9% to end the month at 2110, six points lower than where it began the month. And the ISDEX dropped 16% from its May 22 peak of 302 to close May 31 at 252, four points lower than where it traded on May 1.

Under the circumstances, it’s not surprising that there were only three ISDEX stocks (out of 50) that ended May with price changes of greater than 30% from where they began the month. But the stock that topped the index in May was a surprise: financial services applications firm S1 soared 58% after topping earnings estimates and predicting that it will be in the black on an EBITDA basis by the end of the year.

The other two big ISDEX movers were to the downside. Portal Software plunged 39% on an earnings warning, and former high-flyer Ariba lost 31% on concern about the viability of its business model. The number five loser in May was also a B2B stock, Commerce One , which dropped 28%. The struggles of Ariba and Commerce One make i2 Technologies’ 15% gain last month worth noting.

Another surprise in May was that the bottom of the list was populated by stocks that until recently were – or still are – thought of as leaders. Palm lost 29% in May on an earnings warning, but rebounded smartly Friday on management assertions that business is improving. And Juniper Networks , one of the greatest performers in 1999-2000, also lost 29% in May, as worries about the abysmal state of telecom equipment spending began to spread to the stocks whose fundamentals are still holding up.

On the upside, resurgent came in second in May with a gain of 28%. On top of the stock’s 141% gain that led all ISDEX stocks in April, the pay-per-click search service bears watching.

Rounding out the rest of the top five were: takeover candidate Ameritrade , up 26%; Vignette , up 22% on optimism over new products and positive analyst comments; and eBay , up 20%, the one dot-com that has not only survived, but thrived.

Finally, a quick technical look at the ISDEX. The index broke out of an inverse head and shoulders bottom on April 18 (see chart below) at 227. With a head at 159 and a neckline at 227, the index had 68 points of upside potential, which it exceeded by 7 points at its 302 peak. To the downside, 242 is first support, and 227 is critical support. To the upside, key resistance is 300-302. If the index turns back in the 292 range, it could be forming a head and shoulders top.

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