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Tech ticks higher despite Hewlett-Packard declines

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Technology stocks are showing gains for a third consecutive session as the NASDAQ-100 Index (NDX.X) 1,327 +1.7% has reversed early morning losses as breaks above yesterday's high.

Bears look to be continuing to cover despite last night's earnings from Dow component Hewlett-Packard (NYSE:HWP) $19.39 -5.36% and missing estimates by a penny a share. The Palo Alto, California based company said that revenues for the second quarter fell to $10.6 million from $11.7 billion a year earlier, largely due to continued reluctance among corporate customers to increase their IT spending.

The broader S&P 500 Index (SPX.X) 1,095 -0.14% got a face lift in recent sessions as Standard and Poor's dropped WorldCom (NASDAQ:WCOM) $1.20 -3.6% and U.S. Airways (NYSE:U) $2.89 +1.4% in lieu of Apollo Group (NASDAQ:APOL) $38.35 +2.10% and BJ Services (NYSE:BJS) $37.49 -3%.

S&P 500 Index Chart - Daily Interval

The S&P 500 Index (SPX.X) has traded in a tight range today and hovers right near the 61.8% retracement level. Bulls look to have the upper-hand near term and a move much above the 1,100 level most likely sees some bears remove risk as the next level of resistance would come near the trending lower 50-day and 200- day moving averages near 1,120.

Later today, International Business Machines (NYSE:IBM) $85.50 +0.02% will hold its meeting with analysts. Comments from that meeting about current and future business trends will most likely impact tomorrows trading.

According to www.stockcharts.com, the S&P 500 Bullish % ($BPSPX) is currently showing 61.4% of the stocks in this market having a point and figure buy signal associated with its chart. Current status is "bear alert." A reversal higher at 64% would have the S&P 500 back into "bull confirmed" status, while a lower reading of 52% would have the S&P 500 internals weakening further to a "bear confirmed" reading.

Jeff Bailey
Senior Market Technician
Option Investor

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