Futures Say Next Move Is Up

But a move down could turn nasty if it breaks support.
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Remember the way stocks traded through the winter? Every time the

S&P 500

futures got up around 1290, selling ensued. It was a huge line of resistance, a ceiling that the market bounced off five times before breaking through.

Well, guess what? We're there again. At 9 a.m. EDT, the S&P futures were up 10 to 1294.50, putting them more than 7 above fair value. It makes sense that they're higher and it makes sense that we're looking at a positive open. Lines of resistance on the way up, once broken, become lines of support on the way down. Just as it was a good time to sell once the futures hit this level during the winter, during the spring it has been a very good place to buy.

But

Charles Schwab

head of listed trading Todd Clark, who follows the action in the futures closely, is suspicious of the move. "I'm afraid you don't want to chase a higher open," he said. Clark did not like that the futures broke 1290 on their close yesterday, and though he thinks the market is deeply oversold, he feels that it probably won't be time to buy again until the futures hit 1267.

With yet-another raft of IPOs coming out and an influential analyst saying the sector may yet see more damage, Internet stocks will again be the focus today.

Though by traditional measures

barnesandnoble.com's

(BNBN:Nasdaq) IPO yesterday, with its 38% rise, was a strong one, in Internet terms the thing was a dud. Investors will be closely following today's deals -- particularly

DLJdirect

(DIR:NYSE) and

StarMedia

(STRM:Nasdaq) -- to see if supply's begun to meet demand.

Into that mix, toss comments from

Morgan Stanley Dean Witter

analyst Mary Meeker, who said today that

TheStreet.com Internet Sector Index

could fall another 100 points to 450 before these stocks find their base.

The bond market saw little reaction to a weak

durable goods report

. The 30-year Treasury was off 9/32 to 92 19/32, lifting the yield to 5.74%.

With investors uncertain about what's going on with Wall Street and the details of the next round of economic stimulus still unknown, Tokyo stocks huddled near the flat line in light trading. The

Nikkei

added 16.29 to 16,230.52.

It was a choppy day in Hong Kong, where a late-day rally in the futures dragged the market into positive territory. The

Hang Seng

added 62.25 to 12,409.16.

With investors disappointed over the restructuring of

Guangdong Enterprises

, though, China plays and banks didn't participate in the move. The Guangdong government's debt restructuring plan for the insolvent company will leave lenders with some heavy losses.

European stocks were mixed. In Frankfurt, the

Dax

was up 38.79 to 5181.89. In Paris, the

CAC

was down 8.45 to 4365.33. And in London, the

FTSE

was off 3 to 6246.3.

Wednesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • Charter Communications, a cable company owned by billionaire Paul Allen, plans to buy Falcon Cable TV for about $2 billion in cash and stock and the assumption of another $1.6 billion in debt, The Wall Street Journal reported. Both companies are privately held.
  • In the new issues world, several stocks will start trading today after having their IPOs priced yesterday. The 16 million-share IPO of DLJdirect (DIR:NYSE), Donaldson Lufkin & Jenrette's (DLJ) online brokerage unit, was priced top-range at $20 a share. Elsewhere, Salomon Smith Barney priced New York-based Internet service provider Juno Online Services' (JWEB:Nasdaq) 6.5 million-share IPO top-range at $13 a share. Jefferies priced Ziplink's (ZIPL:Nasdaq) 3.5 million-share IPO top-range at $14 a share. The company offers wholesale Internet access services. In other IPO news, BT Alex. Brown trimmed the expected IPO of Private Business (PBIZ:Nasdaq) to 5 million shares from 7.15 million shares and cut the price range to $9 to $10 from $13 to $15. In other news (earnings estimates from First Call):
  • Adelphia Communications (ADLAC) has agreed to swap certain cable systems with Comcast (CMCSA) - Get Report and Jones Intercable (JOIN) , "in a geographic rationalization of the companies' respective markets."
  • Fleetwood Enterprises (FLE) , an RV maker, reported fiscal fourth-quarter earnings of 66 cents a share, 5 cents ahead of the four-analyst estimate but down from the year-ago 81 cents.
  • Fluor (FLR) - Get Report reported fiscal second-quarter operating earnings of 62 cents, a penny shy of the eight-analyst estimate and down from the year-ago 67 cents.
  • Merrill Lynch reinstated coverage of Microsoft (MSFT) - Get Report with a near-term accumulate rating and a long-term buy rating. The price target on the stock is 86.
  • Morgan Stanley Dean Witter's influential Internet analyst Mary Meeker said she sees 20% more downside in the Net sector and that the damage in the arena is not complete, CNBC reported.
  • Credit Suisse First Boston reduced its earnings per share estimates for Oracle (ORCL) - Get Report in the fourth-quarter to 30 cents from 33 cents and full year 1999 to 82 cents from 85 cents. The firm also lowered fiscal 2000 earnings estimates to 97 cents from $1.02. The firm also sliced its price target to 32 from 39.
  • While Starbucks (SBUX) - Get Report has long sold coffee beans, coffee-making paraphernalia and compact disks online, there's a new online plan on the way that's expected to mark a big expansion of those efforts, the Heard on the Street column in the Journal reports.