That's right. One of the biggest tech names in the world makes a preannouncement and it's a clear signal to buy technology stocks. Not exactly, but that's what you'd have to surmise from looking at today's action.
With the exception of semiconductor stocks that were punished by
warning, the tech sector had an unbelievably good session. The Nasdaq closed down 25.11, or 0.7%, at 3803.76 after trading as low as 3614.66, quite a recovery from the 200-plus point drop it saw on the opening.
TheStreet.com Internet Sector
index closed up 3.05, or 0.4%, at 780.09 after trading as low as 740.98.
A couple of things happened. Investors apparently determined that Intel is not the tell-all for the technology sector it may once have been, and decided not to punish all tech stocks for its woes. Once the bargain hunting began, it just picked up momentum, forcing those who had shorted the market to cover those positions. Buying plus short-covering can reverse 200-point losses faster than
can run the 200. Add to that, there are those who saw the sharp opening drop as perhaps a sign that a bottom had been reached, sending most everyone into a buying frenzy.
Per usual, investors piled into some of their favorites, many of which dropped on the opening.
closed up $14.53, or 7%, at $225.66 after trading as low as $202.25. The stock was featured positively in
closed up an amazing $14.88, or 20%, at $89.88 after trading as low as $70.25. Other than yesterday's announcement of a 2-for-1 stock split, there was no news on the stock today.
On the downside,
closed off $2.44, or 6%, at $37.50 after it was downgraded by
Thomas Weisel Partners
, from strong buy to buy.
3:14 p.m.:Technicians Scrambling for Direction on Frenetic Day
In a market that started as bad (and bounced back as well) as today did, you can bet there will be a bunch of different thoughts on what has happened and what's yet to come.
Some technicians call it a day of capitulation -- when investors throw in the towel, think the world is coming to an end and just look to dump everything they have no matter the price. Others are saying that this isn't it, but "Look out!" because bad news is coming.
What does it really mean? According to some, today has signified a bottom in the market based on a contrarian viewpoint. But from all indications, what occurred today is not a day of capitulation.
has bounced back from a low of 3615 made first thing this morning. It recently was trading down 67 to 3761.
But, Dick Dickson, technical analyst with
Scott & Stringfellow
, said the price action would look even better if prices from the end of night trading at 6:30 p.m. were used rather than the 4 p.m. New York session close. He noted that much of what occurred in the market happened right after
warnings announcement and investors have been bottom fishing ever since.
With so many buyers stepping in, Dickson is in the camp of people who believe there has been no capitulation. He said he saw a note early today advising investors to buy stocks on the pullback, and every stock was one in the tech sector. Hardly capitulation.
But Dickson does think that day is still coming, and threw out any number of fundamental factors why it would occur, including politics, IPOs, insider sales or strengthening of the euro, all of which could put pressure on the tech sector. As for a level, Dickson said he was targeting 2900 in the Nasdaq over the next six weeks. He said today's bounce could mean that the Comp is heading back to 4000, though he did not think it would get that high. The reason Dickson thinks the tech sector still needs a washout is that valuations remain high and need to come in.
Elaine Yager, vice president and senior technical analyst with
Herzog Heine Geduld
, said a number of criteria would need to be met by the end of the day to show there was capitulation. Those criteria included upside volume over downside; advancers leading decliners, and price reversal action to the upside. Right now, she said there was nothing to suggest there was a climax in the market and all the Nasdaq was doing was attempting to fill the gap it left on the opening. Yager said that it was the wrong timing for a bottom, and that the market typically stays weak into October. She said if she saw this same price action in October she might feel differently.
Among the stocks that have recovered,
was up 3.7% to $219 after trading as low as $202.25. The stock was featured positively in
was up 13.2% after trading as low as $70.25. The stock has rallied since announcing a 2-for-1 split yesterday. And everybody's favorite business-to-business stock,
, was up 6%, after trading as low as $145.25.
Not participating in the rally was
, down 5.5% after it was downgraded by
to buy from strong buy. Also in the online advertising space,
was down 2.2% after warning its third-quarter revenues would be lower than expected. ValueClick did say it intends to buy back $10 million of its stock.
11:01 a.m. EDT: Intel's Woes Not Making Too Much Trouble in Tech-Land
There's no way to avoid mentioning
, but you should all know the story about its sales
warning by now so we'll skip the details.
You also know that Intel's problems were reverberating elsewhere in the sector, but like the car wreck on the side of the road, you have to look to see how bad it is.
Nasdaq was down 104 to 3725 in early trading, though it traded more than 200 points lower on the opening. While losses were still severe, there was no question that traders were sifting through the wreckage, attempting to find the stocks that may not be as impacted by the euro as Intel was and will recover the quickest once the initial shock has worn off.
TheStreet.com Internet Sector
index was down 9 to 768.
Among the casualties were online financial firms amid concern that any prolonged weakness in the market will lead to a decline in trading volumes.
was down 4% and
was down 2.1%.
was down 3.6%.
The Wall Street Journal
reported that the market maker may not be a takeover target for Morgan Stanley. However,
was up 10.2%.
Gene Marcial reported that Schwab had held "informal" merger talks with
Elsewhere, shares of
were 2.4%. The Internet incubator reported a loss of $2.17 for its fourth quarter last night, better than the $2.45 estimate from
First Call/Thomson Financial
. Our own George Mannes took a closer look at the numbers in a
piece that ran last night.
actually was trading higher, up 2.2%.
The Washington Post
reported that AOL and
have gained European officials' concessions they hope will be sufficient to assure approval for the merger of the two companies. According to the report, the concessions dealt with attempts to assure regulators the company would not use its power to discriminate against rivals.
was up 1.4%. The company was written up favorably in another Marcial piece in
that claimed the company was taking business away from rival
in the Internet core router market.