From Briefing.com: Updated: 19-Feb-03 - General Commentary - With the Bush Administration willing to give peace a chance - at least for another couple of weeks - investors were willing to give stocks a chance - at least for another day. Nasdaq jumped another 2.8%, and is now in positive territory for the year. Chip, Software and Networking stocks paced the advance.
Despite the 5% jump in two days, Briefing.com cautions investors that rebound has much more to do with technical bounce than with any change in fundamentals. Macro-economic condition remains clouded, war with Iraq is still highly probable, IT spending is sluggish and earnings visibility remains limited. Consequently, once the oversold tone has been worked off - and the last two days have gone a long way in achieving that end - sector/market likely to return to trend. Unfortunately, that trend is still bearish.
Could indices extend advance another couple days, even weeks? Sure. But there's nothing in the data or the market action to suggest that the underlying trend is about to change. Note that the recent gains have occurred on very light volume. Storm might be to blame for yesterday's lackluster action, but snow has played no role in pitiful volume on up days over past couple of months. Pure and simple, there's still not enough buying interest to sustain a rally.
What will change that equation and bring buyers off the sidelines? Cheaper valuations - another way of saying lower prices and/or a material change in end-user demand for tech. So far there's been no widespread evidence of the latter, and nobody really wants to see the former - at least not after three years of brutal declines.
Robert Walberg, Briefing.com
6:00PM Tuesday After Hours price changes vs 4pm ET levels: The upbeat tone of the regular session has carried over into the after hours session, where the S&P futures at 852, are 1 point above fair value while the Nasdaq 100 futures, at 1019, are 3 points above fair value. Tonight's round of generally reassuring earnings reports has acted as a backdrop to the positive bias of the after hours trade.
In the tech arena, Photronics Inc (PLAB 12.20 +0.64) reported a Q1 (Jan) EPS loss of $0.26, $0.08 better than the Multex consensus estimate, on net sales of $81.4 mln (Multex of $77.8 mln). As a result, the world's largest sub-wavelength reticle solutions supplier is trading 6% higher in the extended session.
Close Dow +132.35 at 8,041.15, S&P +16.29 at 851.17, Nasdaq +36.37 at 1,346.54: Stocks opened higher across the board, ostensibly on an easing of war fears with Iraq...this was partly based on a news item from DPA (a German new agency) that Hussein might seek exile in Russia...at the same time, however, President Bush said that no new U.N. resolution is necessary for military action...the Iraq situation is still unclear, but at least it might be moving to a resolution one way or the other...the indices remained in a narrow range after the up open, showing good resilience to the modest selling pressure...
the continuing rally from Friday also simply represents a solid bounce from an oversold position...and the Nasdaq posted the best gains today as Microsoft (MSFT 24.96 +0.81) rallied after splitting 2-for-1...the SOX semiconductor index surged 4.1%, and networking companies were strong as well...all on basically no news...Wal-Mart (WMT 49.08 -0.07) was the biggest specific story, as it reported quarterly earnings a penny ahead of expectations...the gains today were very broad, with most sectors up, and advancers nearly doubling the number of declining issues overall...volume was light, which was partly due to the snowstorm on the east coast...
gold came $8 off its recent highs, and bonds were flat...DJTA +1.8%, Nasdaq 100 +3.3%, Russell 2000 +1.7%, SOX +4.1%, S&P Midcap 400 +2.4%, XOI +1.4%, NYSE Adv/Dec 2360/928, Nasdaq Adv/Dec 2150/1109
10:10AM Technical Levels : Over the prior four weeks, we've harped on this matter of market whipsaws. By 'whipsaw' we mean a move that runs counter to the broad market trend, and where the magnitude of the move is more pronounced than it might be as a consequence of thin trading conditions.
Now the reason this whipsaw terminology comes to mind this morning, is that over Friday's single session -- we'll call it the 'Valentine's Day rally' -- the Nasdaq recaptured the aggregate losses of its preceding seven-session pullback. In fact by the end of the day, the Nasdaq had posted a 33-point, 2.6% advance.
From the standpoint of the intraday activity, many of the same levels were at play as we addressed here in detail on Friday morning's review.
As you've seen in the past, the chart above is an intraday chart of Friday's trade activity in which each bar on the chart represents the opening and closing levels for each five-minute time frame. Note the Nasdaq touched its intraday low Friday right around the 1280 level -- it bottomed at 1279.7 to be specific. Now frequent readers are aware that 1280 area has been consistently pointed out over the prior two weeks, and was also identified as a level of interest in our Friday review.
At any rate, another obvious take away from the chart above is the index took out two areas of resistance before finishing towards its best levels of the session. In a nutshell, Friday's price action was notably strong. Now from the standpoint of the market internals, many of the measures technicians looks towards for confirmation were somewhat lacking. Total volume traded was on the light side, coming in just under the 1.3 billion share mark. At the same time, the market internals were comfortably bullish, though not quite extreme -- advancing volume outpaced declining volume by a strong reading of nearly 6 to 1.
Now in Friday's review, the applicable question was framed as follows: "While the immediate bias once again skews neutral to positive, we continue to face this question of whether any bounce can be sustained. This is a move the aggressive trader probably wants to approach from the long side, while at the same time being fully aware it may represent another false start."
Well at this point, we know that bullish bias shift marked anything but a false start. Yet while we've already placed the Valentine's Day rally within the context of this 'whipsaw' terminology, the magnitude of that Friday advance -- in conjunction with this morning's bullish price action -- begs another question entirely. Namely, whether this current leg higher might represent a near-term bias shift rather than a simple whipsaw.
The short answer is the chances look good this current advance will mark a bullish bias shift over at least the very near-term. Also be aware the intermediate-term tone improves on a close above that 1320 to 1323 range. Those two levels bracket notable straight-line resistance as well as the index' 20-day exponential moving average. So that range will be the area to keep an eye on over the next several sessions.
Getting straight to the technical levels -- these will take into account this morning's gap higher. To the upside, the Nasdaq now faces resistance at 1332 which is followed by additional overhead at 1340 and more notable resistance in the range of 1347 to 1350. To the downside, look for important support now in the range of 1320 to 1323, which is followed by another modest support point at 1313. -- Mike Ashbaugh, Briefing.com
4:38PM Photronics tops estimates (PLAB) 11.56 -0.41: Reports Q1 (Jan) loss of $0.26 per share, $0.08 better than the Multex consensus of ($0.34); revenues fell 14.9% year/year to $81.4 mln vs the $77.8 mln consensus.
8:38AM Skyworks upgraded at Soundview (SWKS) 6.55: Soundview upgrades to Outperform from Neutral based on their belief that Q1 inventory issues have been factored into ests and phone demand appears favorable; over the long-term, firm thinks SWKS's new product momentum will drive margin leverage and top-line growth ahead of its peers and the handset mkt overall; maintains $12 price target.
6:46AM Small chip firms risk being flattened by Intel's Manitoba -- Barron's : Barron's suggests that Intel's Manitoba wireless chip could lead to a battle between Texas Instruments and Intel, leaving smaller chip names trampled in the process. Mentioned were BRCM, ISIL, MRVL, NVDA, QCOM, AGR.A. Alex Guana of UBS ticked off the portion of some smaller firm's revenues that may be at risk: 60% for BRCM; 47% for MRVL; 37% for ISILl and almost 10% for AGR.A. "I'm not going to say that Intel wins and everybody else loses," stated another UBS analyst. "But the Darwinian fallout on this could be material."
finance.yahoo.com^SOXX+AGRa+ALTR+AMAT+AMD+BRCM+INTC+ISIL+KLAC+LLTC+LSCC+LSI+MOT+MRVL+MU+MXIM+NSM+NVDA+NVLS+PLAB+QCOM+SWKS+TER+TXN+XLNX+^IXIC+^NDX+^SPX+^VIX+^VXN+^STI.N+SMH&d=t
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