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Pulse: Tech Stocks Come Back Strong, but Can Rally Be Sustained?

Technology stocks staged an impressive comeback, but the question remained whether it was just a bounce after a bunch of down days or something that could be sustained.



ended the day up 139.08, or 3.7%, to 3865.60, extending gains into the close as shorts were forced to cover positions. Internet Sector

index closed up 19.21, or 2.5%, at 791.79.

After the close, Dick Dickson, technical analyst with

Scott & Stringfellow

, was asked by

whether he was sticking with the call he had made before the open that the market would likely see a short-term bounce that would not be sustainable longer term. He said he was staying with his call even though it could still rally some more from here, but unravel in the next few days. He said he would need to rethink his position if the Nasdaq closed above 4000. Dickson also said that short term, the Nasdaq was the least oversold of the indicators, so in a rally it could be the first that is overbought, meaning it was hastening the end of the rally with such a big advance like today.

On a day when much of the tech sector was running wild there were some standouts.

Juniper Networks

(JNPR) - Get Juniper Networks, Inc. (JNPR) Report

closed up $17.94, or 9%, to $209.94 after introducing new network devices.


Redback Networks


added $15.94, or 11.5%, to $155. Redback will be teaming with




Portal Software


, and

Sun Microsystems

(SUNW) - Get Sunworks, Inc. Report

to provide an integrated broadband service delivery framework, which will enable the distribution, personalization and billing of broadband services. Inktomi added $2.59, or 2%, to $123, while Portal closed up $2.88, or 7%, to $42.75 and Sun added $2.44, or 2%, to $117.69.

Barnes &


closed up $1.38, or 30%, to $5.94 on news it would replace

(AMZN) - Get, Inc. Report

as the premier bookseller on


directory, including a featured merchant on its shopping site. Amazon, which said it had decided to team with

America Online


and not Yahoo!, closed down $2.06, or 4.8%, at $40.75. The online retailer held an analysts' day in Reno, Nev.

Among business-to-business plays,



closed up $11.06, or 7.7%, at $155 as analysts had nice things to say about the software company after its user's conference yesterday. Also, Ariba and

i2 Technologies


benefited from news that


, a business-to-business marketplace for the consumer food products and services industry, would use technology from the two companies to power its service. i2 added $12.81, or 7.6%, at $182.25.

2:22 p.m.: Tech Strong in Afternoon Trading

Technology stocks were maintaining gains and the

Nasdaq was at trading up 83.4 to 3809.9 in afternoon trading. Internet Sector

index was up 8.66 to 781.24.

Over at our

sister site, James Cramer was attempting to figure out where things were going with tech. Here's part of his take.

"The tug of war here is how much negativity is already in stocks. When it comes to


(INTC) - Get Intel Corporation (INTC) Report

), to


(MSFT) - Get Microsoft Corporation (MSFT) Report

, and now to


(SANM) - Get Sanmina-SCI Corporation Report

, we think too much negativity is now discounted. There is too much pessimism. But it is all case by case. We can't make a sweeping generalization about all stocks. One by one we analyze. We can't afford to decide that all of tech has bottomed. Some simply haven't come down as hard as others."

Cramer also has some advice about how you can figure out whether the market has bottomed. "When I worked with my wife, she used to use the one-third rule in corrections. When you think a correction has run its course, probably a third of the stocks have bottomed. Another third are bottoming. And another third aren't there yet. That's pretty much where we think we are in tech right now."

On the move

Among stocks on the move,

(AMZN) - Get, Inc. Report

was down 7.3%. The company was holding an analysts' day today in Reno, Nev., but was weaker on news that

TheStreet Recommends


would replace Amazon as a featured merchant on its shopping site. In a

separate story,

wrote about the bookseller soaring on the news. was jumping 30.1%.

Also a standout, but on the upside, was

Juniper Networks

(JNPR) - Get Juniper Networks, Inc. (JNPR) Report

, up 9.4% to $210. The company announced it had added to new edge routers to its product portfolio. The news was having an impact on some other companies as well. In a note on the new additions,

Salomon Smith Barney

analysts wrote that Juniper would be competing at the very high end of

Foundry Networks'



Extreme Networks'

(EXTR) - Get Extreme Networks, Inc. Report

target markets. Even before the Juniper announcement, Salomon had upped its price target on the stock to $310 from $245. Foundry moved 5.7% lower, while Extreme was up 6.4%.

Having an up-and-down day was

(STMP) - Get Inc. Report

. The Internet postage firm traded up about 15% early on, after the company announced its Internet postage system would be integrated into

Microsoft Works 6.0


Works Suite 2001

. But investors may have been focusing on a negative note on the company from Salomon, which lowered its revenue estimate on the company yesterday. In addition, the company was sued yesterday by

Pitney Bowes

(PBI) - Get Pitney Bowes Inc. Report

over patent infringements, charges that denied.

11 a.m.: Nasdaq Bouncing Back as Bargain-Hunters Refill Their Coffers

Buy the dip, or sell into it? The answer to both questions could be Yes.

In early trading, the

Nasdaq was up 61 to 3787 Internet Sector

index was up 9 to 781.

In his pre-opening note, Dick Dickson, technical analyst with

Scott & Stringfellow

, noted that the market could bounce over the next couple of sessions. He noted that some of his short-term indicators were giving buy indications and, combined with the market's oversold condition, should be enough to produce a bounce.

"But that's all we're expecting," he wrote. Dickson indicated that with intermediate-term indicators giving "clear-cut sell signals," and the market was still relatively overbought for the intermediate term, "we don't see any bounce here turning into a sustained rally. Rather it should just set the stage for a further decline that should, in turn, produce a significant low sometime over the next four to six weeks."

Among stocks in the news,

Barnes &


has been one of many out-of favor e-commerce stocks, but was up 32.2% today on news that it would replace

(AMZN) - Get, Inc. Report

as the premier online bookseller on Yahoo!. Amazon did not renew its three-year marketing agreement with Yahoo!, according to

The New York Times

, paving the way for Barnes & to link up with




Perhaps more importantly to investors of Yahoo!, the company was tight-lipped regarding the its advertising revenue at a

Banc of America Securities Investment Conference

attended by our own Tish Williams.



was up 3.8% after the business-to-business software company held a user's conference yesterday.

Credit Suisse First Boston

analyst Chris Vroom wrote that although the company's fundamentals "could not be stronger," with likely upside to fiscal fourth-quarter numbers, he did not expect the same "torrid increase" that was seen in the third quarter. Ariba's revenues grew around 100% in that quarter.

Check out Joe "B2B" Bousquin's

piece on the battle between Ariba and

Commerce One



Ariba also was benefiting from news that


, a business-to-business marketplace for the consumer food products and services industry, would use technology from Ariba and

i2 Technologies


to power its service.

Also on the upside,

Juniper Networks

(JNPR) - Get Juniper Networks, Inc. (JNPR) Report

was up 5.4%. The company debuted some new high-end network devices today.