Apple Finds a Bottom,  But Dell Warns After Hours

Bargain hunters began to drive the Nasdaq higher this morning, but they were greeted by waves of eager sellers that took all day to overcome. Appleis stock clawed its way higher through reams of volume.

While the number of preannouncement warnings are lower this quarter than the historical average, there are more corporations warning this quarter than last. Negative earning alerts are running at 70% of all earnings preannouncements this quarter, compared to last quarteris 66% and the first quarteris 55%. The trend is a sign of a slowing economy.

After the market closed, CNBC reported that Dell said 3rd quarteris revenues are trending 3% below expectations. Dell said its $0.28 per share earnings target for the 4th quarter is too high by 1 or 2 cents.

Apple came back by 1 5/16 to close at 23 5/8 on volume of 26 million shares. Volume abated somewhat after the last two day of plus 30 million shares trading per session. AAPL generally trended higher all day, after touching an intraday low of 21 7/8, then jumped to close at the dayis high in the last hour.

AAPLis stock hasnit been this cheap since July 2, 1999. The 21 to 23 dollar range could offer support for the stock. If not, the 16-18 dollar range appears to be a bedrock long term level of support for AAPL going back to mid-1998. Assuming "the other shoe will drop" when Apple explains in detail why it missed earnings this quarter, the stock may still trend lower. The company still has to adjust forecasts lower on October 18th when Appleis management holds its quarterly conference call with analysts to announce earnings.

Meanwhile, the inevitable Death-Of-Apple-Is-Imminent articles are sprouting like mushroom after a rain. Itis all part of the "discounting" process that must occur as we pass through the nadir of AAPLis cycle.

See this weekis Apple Trader column, In Steve We Trust, for the circumstances surrounding Appleis recent fall from grace.

The Nasdaq climbed 67 points (1.95%) to close at 3523 on big volume of 2.09 billion shares. Itis the first week of a new quarter and typically the season for fund managers to start putting new money to work in the market.

The Dow rallied 64 points (.60%) to close at 10784 on volume of 1.1 billion shares. It wasnit a great day for the Dow, many internal market indicators were negative and the close was 64 points off the sessionis intraday high.

The capital good and basic material stocks had a second day of rally. But the utility stocks which have been the leading group on the NYSE appears to be breaking down. Utilities are down about 5% in the last two days in what could be a double top unfolding.

The S&P 500 climbed 7.86 points (0.55%) to close at 1434.32.

In Apple related businesses: Oracleis stock fell 1 1/2 to 68 dollars, after being much lower in the morning, on fears of slowing sales growth in the near future. This afternoon, Oracle triggered a very late day rally in tech stocks by coming out in defense of their stock, saying database and application software revenue is expected to grow faster than in the previous fiscal year.

Robertson Stephens commented: "Although Oracle has a powerful vision and compelling playbook, and may ultimately prove to have the winning formula, we believe it will take at least 2-3 quarters to see meaningful evidence of the companyis execution and industry adoption along this strategic direction. As a result, we are lowering our rating to Long-Term Attractive from Buy. Looking beyond the next 2-3 quarters, if Oracle can execute on its vision, we believe the company could be well-positioned to dominate both the database and applications markets longer term."

Akamai climbed 1 1/2 to 45 1/2. According to Reuters, Nitsan Hargil, an analyst with Kaufman Brothers, met with Akamaiis management recently and said he expects the company to meet its gross margins targets. "Analysts see Akamaiis third quarter revenue range from $24 million to $25 million, but Hargil said revenues may surpass that. According to an analyst consensus compiled by First Call/Thomson Financial, Akamai is expected to lose 67 cents a share in the third quarter."

Adobe fell 5 7/16 to 158 dollars, as investors took some of their handsome profits off the table.

Earthlink fell 11/32 to 8 1/32, for the stockis 3rd consecutive 52-week low. Upside.com reported Earthlink isnit happy with the way AOL and Time Warner plan to implement open access in order to get past the antitrust watchdogs. "EarthLink is concerned that Time Warneris idea of access to its cable pipes involves terms that would make it difficult for EarthLink to offer a service at all."

Motorola gained 2 5/8 to 29 5/8. IBM climbed 4 dollars to 114 9/16.

Appleis competitors: Dell lost 3/8 to 28 3/16, another 52-week low. The stock will probably take a beating tomorrow after management lowered 3rd and 4th quarter forecasts.

Gateway was higher by 1.85 to 51.85. Compaq climbed 1.24 to 28.69. Shares of Microsoft continued lower by 1 1/8 to 55 7/16. Intel bounced 1 11/16 to 42 dollars. Hewlett Packard gained 2 dollars to 95 1/2.

In economic news: Increasing demand for transportation equipment pushed US factory orders higher in August by 2%. In July, factory orders had posted a 8.1% drop, the largest monthly decline ever recorded.

The Wall Street Journal reported:

Orders for electronic and electrical equipment, including household appliances and communications equipment, went up by 2.7% in August, mostly due to higher demand for electronic components. The month before, such orders fell by a sharp 18.9%.

Orders for durable goods -- big-ticket manufactured items expected to last at least there years --jumped 2.9%, following a 13.2% decline in July. For nondurables, such as fuel, orders rose 0.9% after a 0.7% drop in July.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Appleis stock activity, visit our Apple Stock Watch Special Report.

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