Richard McCabe, Merrill's chief technical analyst, said tech stocks could rally 50% from current levels in the coming months.
But Merrill technology analyst Steven Milunovich has no plans to go along for the ride.
Milunovich said he is keeping tech stocks at a market weighting because the current rally has "little fundamental justification." Because the tech sector gets more than 50% of its revenues from overseas, Milunovich said, this year's improvement in technology earnings is more the result of a favorable currency translation caused by the sharp decline in the U.S. dollar relative to other currencies. Overseas customers' newfound ability to buy more for less is "masking weakness in demand," he said.
The Nasdaq slipped 1 to 1491, the S&P 500 lost 1 to 919, and the Dow slipped 2 to 8491. Volume rose to 1.5 billion shares on the NYSE, and 1.7 billion on the Nasdaq. Advancers led 18-14 on the NYSE, but decliners led 16-14 on the Nasdaq. Downside volume was 54% on the NYSE, and 61% on the Nasdaq. New highs-new lows were 185-13 on the NYSE, and 84-8 on the Nasdaq.
After the close, HPsurged after beating estimates and reaffirming guidance.
During the day, Agilentrose 3.4% after matching estimates and reaffirming guidance.
iVillagesurged 10% on a partnership with Drugstore.comto sell sex products.
eBayrose 1.2% after launching a rewards program.
IBM, down 0.8%, rolled out its first products from the acquisition of Rational Software.
SBCrose 0.1% on WiFi plans.
Ciscogained 0.3% on a security push.
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