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NASDAQ Composite Bullish % turns higher

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Wednesday's trading action had the NASDAQ Composite Bullish % ($BPCOMPQ) from www.stockcharts.com reversing higher to "bull alert" status yesterday, which now has all of the major market index internals in a more bullish phase.

This follows the NASDAQ-100 Bullish % ($BPNDX) which was the first to turn higher after October 11, then the Dow Industrials Bullish % ($BPINU) on October 14, then both the S&P 100 Bullish % ($BPOEX) and S&P 500 Bullish % ($BPSPX) turned higher on October 15th and then on October 21 the very broad NYSE Composite Bullish % ($BPNYA) reversed higher. This action shows internal strengthening across the various indexes. This is a normal pattern/time line for how the bullish % charts tend to move and shows market internals in a bullish phase where demand is beginning to outstrip supply in a more meaningful way.

Pre-market trading has wireless technologies company Qualcomm (NASDAQ:QCOM) $36.52 sliding lower at $35.35 after a downgrade by Credit Suisse to "underperform" from "neutral" on the firm's view that current valuation already reflects upcoming positive news. CSFB believes Qualcomm will underperform the wireless group over the next 6-12 months and sets its price target on the shares at $27.

Software giant Microsoft (NASDAQ:MSFT) $53.19 is inching higher at $53.45 despite an article in the LA Times reporting that the Justice Department is investigating allegations that MSFT continues to hide technical information about its Windows operating system from competitors. Such "behavior" would violate key provisions of the settlement that the company reached with federal officials in November to bring the antitrust case to an end.

Tyco International (NYSE:TYC) $13.94 dropped 94 cents, or -6.7%, to $13 in Instinet after the company reported fiscal fourth- quarter earnings that fell short of consensus analyst estimates, and indicated that first quarter results would miss, as well.

European stocks were putting in big gains, reversing some steep declines near the close in key sentiment stocks like the German banks, automakers and the tech group. France's CAC 40 jumped 3.72%, Germany's DAX gained 2.7% while the UK's FTSE-100 rose 2.07%.

Shares of AOL (NYSE:AOL) $13.53 changed hands at $14 in Instinet. Yesterday, after the close, AOL posted third quarter results that narrowly outpaced Wall Street estimates and disclosed that an internal review of its accounting practices found the company's AOL division had overstated revenue by $190 million over the last two years.

Broker comment was mixed overnight with most analysts leaving their ratings unchanged, even as the 13 percent increase in subscription revenue and 8 percent gains in content licensing revenue drew praise. In short, the upside surprises on the top and bottom lines were largely attributed to the traditional Time Warner businesses and not to AOL by some of the analysts.

"The current outlook remains cloudy, with little visibility for improving advertising dynamics at AOL and ongoing concerns about financial restatements overhanging the company and the stock," UBS Warburg told clients overnight.

Goldman Sachs said it expected "upside is limited given the continued deceleration of the AOL U.S. business... the remaining SEC/DOJ overhang, and the looming fourth quarter AOL/cable division goodwill write downs."

Biotech giant Amgen (NASDAQ:AMGN) $50 traded up $1, or 2 percent, at $51 in the pre-open, but was off overnight peaks of $51.29. Amgen's 34 cents a share for third quarter earnings topped the consensus expectation by 2 cents. Some brokers moved to raise estimates for earnings going forward in the wake of the results. Management guided to 2002 sales growth in the upper 30 percent level, analysts noted.

In other pre-open movers: Shares of AT&T Wireless (NYSE:AWE) $5.45 was stepping up at $5.90, up 45 cents, or 8.3%. JP Morgan upped its rating on the stock overnight to 'overweight' from 'underweight' "based on the surprisingly high quality of third quarter 2002 results ... as well as the passage of significant execution risks (GSM network finally launched)."

Juniper Networks (NASDAQ:JNPR) $5.34 is inching higher at $5.40 ahead of its quarterly numbers as well.

In economic news Jobless Claims fell 25K to 389K, below the 405K market consensus; the 4-week average is also trending lower again and now stands at 404K. Continuing claims fell 115K, which will also be greeted favorably as it indicates the prior week's sharp gain was an aberration. Really not much happening on the labor market front - conditions appear to remain flat with layoffs being roughly matched by hiring, leaving little net job growth.

All of the above finds S&P futures (sp02z) trading up 5.2 points at 903.50, NASDAQ futures (nd02z) higher by 3.5 points at 996 and Dow futures (dj02z) higher by 48 points at 8,540.

Fair value for the S&P 500 today is $0.32. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.60 and set for program selling at $-1.45. Fair value for the NASDAQ-100 today is $2.46.

Jeff Bailey

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