-- Thursday, October 22 --
HIDDEN BULL
The Dow continued its winning streak with a small gain, but the good news lies in other indices and the market breadth.
The Nasdaq composite index continued to diverge upward from the Dow -- today's advance historically equals approximately 125 Dow points. The Russell 2000 index of small-cap companies, meanwhile, pressed onward in its strong recovery. The Russell has now gained 17 percent since its low on October 8.
Positive earnings surprises outnumbered negatives today, as companies continue to defy the fearful anticipation of this fall's earnings season. Among the major companies delivering good news were Coca Cola (CCE), Transocean Offshore (RIG), Procter & Gamble (PG), Boeing (BA), Sears (S), Silicon Graphics (SGI), Office Depot (ODP), Dow (DOW), Xerox (XRX), Lucent (LU), and even recent IPO GeoCities (GCTY). Tuesday afternoon's shining reports from Microsoft (MSFT) and IBM (IBM) continued to lift the technology sector.
TIDBITS: Avid for tech companies? Hambrecht & Quist displayed enthusiasm for Avid Technology today, raising fourth-quarter earnings estimates, and catalyzing AVID stock to a gain of almost 38 percent for the day.
SECTOR WATCH: Internet stocks turned in the most spectacular gains of the day, spurred no doubt by unexpectedly strong earnings reports from upstarts GeoCities and MindSpring. Transportation firms rebounded from yesterday's puzzling pullback, the the cyclical retail sector continued to advance.
TECHNICAL ANALYSIS: Two broad items were encouraging to technical analysts today. First, the indices bounced off intraday lows to rally toward the close, a vibrant and healthy sign. Second, the Russell 2000's gain of 1.3 percent, vs. 0.2 percent for the Dow and 0.3 for the S&P 500, indicates that market optimism has depth. (The Nasdaq Composite index gained a similarly impressive 1.2 percent for the day.)
LOOKING AHEAD:
Friday: About 300 companies release quarterly reports. Watch for Texas Utilities (TXU), Philips Electronics (PHG), Delta Airlines (DAL), American International Group (AIG).
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