Major-Index Rally Masks Another Middling Session

Despite strong gains for the Nasdaq Comp and other key measures, today's narrow breadth means it's not a breakout move.
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The major indices at midday were painting a positive veneer on another tepid session, with clear direction still in maddeningly short supply.

Sure, the

Nasdaq Composite Index

was sporting a solid rise of 28, or 1.2%, to 2288, with

Microsoft

(MSFT) - Get Report

rebounding from yesterday's travails and other big tech stocks hopping as well. And sure, the

Dow Jones Industrial Average

was up 67, or 0.7%, to 9365, getting good support from

McDonald's

(MCD) - Get Report

,

American Express

(AXP) - Get Report

and

Citigroup

(C) - Get Report

. The

S&P 500

was up 7, or 0.6%, to 1244.

The market's internals had a different story to tell.

New York Stock Exchange

advancers were slightly ahead of decliners, 1,393 to 1,360, on 390 million shares. On the

Nasdaq Stock Market

, 1,952 advancers had the edge on 1,628 decliners on 440 million shares. New 52-week lows remained on top of new highs on both exchanges, by 59 to 19 on the Big Board and by 67 to 18 on the Nasdaq.

And, of course, the Nasdaq Comp hasn't done much in the way of rallying since Feb. 12's close of 2321.89. The close match between that week-ago figure and today's midday mark speaks of a Wall Street still struggling to find momentum, one way or another.

A

week ago

TheStreet.com

talked with Robert Dickey, managing director of technical analysis at

Dain Rauscher Wessels

in Minneapolis, who said he saw 2300 on the Nasdaq and 400 on the small-cap

Russell 2000

as key support levels. Now that they've been pierced -- the Russell lately was up 2 to 393 -- Dickey said he thinks the market's likely course is lower. But he's waiting to see more signs.

"We have seen deterioration in the Nasdaq and the Russell but not yet in the Dow industrials," Dickey said. "The question is, is that because those stocks are so good? Or is it the last index to start correcting, which I think is the case. We're waiting for the other shoe to drop, which is the Dow industrials to break under 9100, and then we've got at least another 400 points down before it bottoms out."

The strategist said he's looking for the Nasdaq to dip to 2000, about another 10%, with a similar percentage drop in the Russell as well. The Dow may hold up better, but not much, he said. "I'd be a seller into any of this short-term strength," he counseled.

Conley Turner, an analyst at

Wall Street Strategies

, doesn't take quite so dim a view of the market's prospects as Dickey does.

"For the most part we are having a bit of lateral motion right now in the market," Turner said. "A lot of money has gone to the sidelines, where a lot of investors are waiting to see what happens. I wouldn't say there's a lot of negativity out there but there's an element of caution, because no one wants to get caught holding the bag. Within that we see pockets of opportunity."

One such pocket is -- yes -- the Internet sector, where many leading stocks have gotten beaten with the ugly stick since reaching highs a few weeks ago. Turner pointed to comments today by

CIBC Oppenheimer

analyst -- and

TSC

Net Stock Summit participant -- Henry Blodget, who said it may be time to take a look at battered names such as

Amazon.com

(AMZN) - Get Report

and

Yahoo!

(YHOO)

. (

TSC's

Tech Stock Update took a look at Blodget's move this morning.)

Those stocks and others in the group are pounding higher today, with

TheStreet.com Internet Sector

index up 8, or 1.8%, to 470 and

TheStreet.com E-Commerce Index

up 1, or 0.9%, to 95.

Turner acknowledged that playing a bounce in the Net stocks isn't for every investor. Specifically, it isn't for anyone but a truly sophisticated and liquid trader, able to handle whiplash volatility and extreme uncertainty. For players with a longer-term horizon in this active-trading-friendly environment, Turner advises a focus on more defensive issues.

Dickey agreed, and took an even more conservative stance. "This is a correction, and the way to play it is to stay out of your riskier things but not put a lot

of new money into defensive issues," he said. "If you own those defensive stocks, you should stay with 'em."

The benchmark 30-year Treasury bond was down 2/32 to 98 3/32, its yield at 5.38%. (For more on the fixed-income market, see today's early

Bond Focus.)

Friday's Midday Movers

By Heather Moore
Staff Reporter

As noted above, Amazon.com was reeling in 9 1/16, or 10.1%, to 98 13/16 after CIBC Oppenheimer analyst Henry Blodget said the time might be right to buy shares of the online book and music merchant.

In other news:

America West

(AWA)

was up 2 9/16, or 12.8%, to 22 9/16 after

The Wall Street Journal

reported that

UAL

(UAL) - Get Report

made a conditional cash offer for the company. The move could trigger a bidding war between UAL, parent of

United Airlines

, and

Continental Airlines

(CAIA)

, the newspaper said. UAL was up 3/8 to 59 5/8; Continental was up 1/8 to 31 11/16.

San Diego-based

Bank of Commerce

(BCOM) - Get Report

was up 1 15/16, or 11.4%, to 19 after

U.S. Bancorp

(USB) - Get Report

agreed to acquire the company in a stock swap in which Bank of Commerce holders will get 0.6 of a U.S. Bancorp share. U.S. Bancorp was up 1 to 33 15/16.

Celestica

(CLS) - Get Report

was down 1 5/8, or 5.4%, to 28 7/16 after last night saying it will sell 8 million shares at C$42.60 a share.

Newly issued

Mannatech

(MTEX) - Get Report

continued its slide from yesterday, lately down 5 1/8, or 24.9%, to 15 5/8. Apparently, the Texas developer and distributor of nutritional supplements was thought to be a technology company because of its name. When investors found out it wasn't, they fled.

Merrill Lynch

(MER)

was up 3 7/8, or 5.6%, to 73 13/16 after the

Journal

said it confirmed it's buying the assets of

D.E. Shaw Financial Technology

, a developer of Internet technology for financial institutions and a unit of

D.E. Shaw

. Terms of the transaction were not disclosed.

Newport News Shipbuilding

(NNS)

was up 4 3/16, or 14.7%, to 32 5/8 following last night's news that the company got an unsolicited $2 billion bid from

General Dynamics

(GD) - Get Report

. Newport said it remained committed to a separate planned merger worth $470 million with

Avondale Industries

(AVDL) - Get Report

and that it would consider General Dynamics' offer. GD was down 1 3/16 to 58 7/8.

Polaroid

(PRD)

was up 1 7/8, or 9.9%, to 20 7/8 after the

oft-off-the-mark Inside Wall Street column in

Business Week

reported whispers that a giant consumer-products company is interested in either a merger with or a buyout of Polaroid.

SkyMall

(SKYM)

was up 3 7/16, or 29.9%, to 15 on an agreement whereby

Northwest Airlines

(NWAC)

will link to SkyMall on its Web site. Northwest was up 7/16 to 24 1/4.

Earnings/revenue movers

Boron LePore

(BLPG)

was down 1 11/16, or 13.9%, to 10 5/8 after warning it sees first-quarter results of 9 cents to 11 cents a share due to uncertainty about the magnitude and timing of revenue from new and existing clients. The four-analyst outlook called for 16 cents vs. the year-ago 17 cents.

Ciena

(CIEN) - Get Report

was up 1 9/16, or 7.5%, to 22 7/16 after last night topping first-quarter earnings estimates by 3 cents a share with a profit of 2 cents. In the year-ago period, the company earned 37 cents.

ResMed

(RESM)

was up 3, or 10%, to 32 15/16 after saying it's comfortable with analysts' estimates for the rest of 1999. The five-analyst forecast called for 26 cents a share in the third quarter, 27 cents in the fourth quarter and 99 cents for the full year.

Warburg Dillon Read

raised the stock to strong buy from buy.

Sepracor

(SEPR)

was down 7 3/4, or 5.7%, to 129 after posting a fourth-quarter loss of $1.10 a share, a penny narrower than the 11-analyst estimate but worse than the year-ago loss of 51 cents.