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And There Was Much Rejoicing

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The slew of positive earnings announcements is giving the markets a much-needed boost. The Dow is up 150 points, and the Nasdaq is higher by 79.

As expected, technology stocks like Microsoft, IBM, and Intel are leading the Dow higher, with Wal-Mart thrown in for good measure. The worlds biggest retailer reported that same store sales rose a better than expected 6.9%. Merck, and pharmaceutical stocks in general, is the worst performing stock.

Over on the Nasdaq, software stocks like Veritas, PeopleSoft, and Adobe are all the rage. Qualcomm is up $3.92 after Motorola's better than expected loss, but biotechnology stocks continue to get hammered for the third straight day.

GSTI Software Index Daily Chart

Microsoft has the Software Index (GSO.X) bouncing, and just in time. The index was getting dangerously close to breaking support at 189, but today's 5.81% gain has put a stop to that. GSO is now forming a three-day bullish candle pattern known as a morning star. The pattern suggests a reversal in the short-term bearish trend, and has the added support of a stochastic that is now rolling up. The first resistance test comes at 210, 3 points away. If that can be broken, the Software Index has some moving averages and downtrend to deal with.

Veritas Daily Chart

Veritas (NASD:VRTS) should send a big bouquet of flowers to Microsoft for bringing its stock back from the brink of disaster. VRTS was relying on a gap that form on 4/10 for support, and looked poised to fill that hole. Now up $4.06, Veritas is battling with resistance at $55. This was a heavy congestion area back in April, so this stock could have trouble fighting its way through to $60. It doesn't get any easier after that, thanks to another congestion area, and the gap down on 7/2/01.

Jeff Canavan
Assistant Analyst
www.premierinvestor.net

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