Blue Chips Rally on Election Eve, but the Nasdaq Lags

The Dow soared on light volume and the Nasdaq hugged the negative side of flat as all eyes on Wall Street turned to the US Presidential elections. Appleis stock took it on the chin as part of the weak PC sector, down 3.65%.

The Wall Street Journal describes the eve of the election, "And so the closest, least predictable presidential election in four decades roars to a finish. It has, in its last hours, turned into a contest that defies all expertsi ability to forecast an outcome, giving rise to wild theories of Electoral College deadlocks and leaving hoarse candidates and their frazzled aides hovering in a kind of suspended animation."

CNBC is willing to hazard an election result forecast. Theyire reporting that todayis strong performance in the drugs and financial stocks and Microsoft indicate that the stock markets are anticipating a win by George W. Bush.

Cisco (CSCO) reported earning this afternoon a penny better than expected just like they always do. Revenues came in for the 3rd quarter at $6.5 billion or 66% higher than the $3.9 billion in revenues reported a year ago. This is in the high range for revenues expected by analysts and may help boost technology stocks into rally mode tomorrow.

Appleis stock dipped 13/16 to close at 21 7/16 on volume of 7 million shares traded — the lightest volume since September 27th, the day before Apple warned.

Just in time for the Christmas season thereis news that too much inventory isnit Appleis only problem, too few iBooks is another, say Mac dealers in the U.S., Canada and the U.K.

According to a report by Brad Gibson at Maccentral.com, "A check of seven North American-based dealers located across the U.S and Canada show they havenit been able to order either model for a number of weeks. National distributors are telling the dealers it will be at least another seven to 10 days before they will have inventory to fulfill back orders that have been sitting for weeks."

However, a quick anecdotal check of retail dealers in the Austin, Texas area this afternoon indicate that the iBook is easily available, at least locally.

An ON24 audio report put together by marketmavens.com says AAPL is a beaten-down-and-left-for-dead value stock, so now is the time to stake a position based on Steve Jobsi "touch" and the Apple teamis ability to continue to surprise the market with new products next year.

Meanwhile, Apple is really getting dragged through the mud by the Sunday-Times, a popular British newspaper. In an editorial the newspaper claims only a miracle can save the company from extinction. Talking about the iMac, the newspaper opines, "The idea that this pricey piece of plastic is somehow easier to use than a modern Windows PC is deeply suspect. For value, range of software and hardware, and stability, an off-the-shelf Windows machine is streets ahead of the Mac."

Suspect opinions are one thing, but according to MacSlash the Sunday-Times even manages to diss Apple in a television advertisement featuring, "a small kid leading his father around a PC shop listing all the things he knows he wants in a computer. One of the lines in the ad is iI know I want a PC, not a Mac.i"

The Nasdaq shed 35 points (-1.02%) to close at 3416 on volume of 1.5 billion shares.

Major resistance exists at 3475, so itis not a great short-term indication that the Nasdaq canit break quickly above this level. Yet few traders believe the index will retest the lows of October. Other observers attribute to the stall on the Nasdaq to pre-election day caution.

The Dow rallied 159 points (1.47%) to close at 10977 on volume of 925 million shares.

Traders are asking if the rally in financial stocks is signaling that the Federal Reserve is finished raising interest rates. Or does the rally off recent lows among the cyclical stocks mean investors in this highly recession-sensitive sector believe the economic slowdown isnit going to be serious?

The S&P 500 climbed 5.50 points (0.39%) to close at 1432.19.

In Apple related businesses:

Adobe rallied 2 9/16 to 83 1/4 as traders speculated ahead of Adobeis meeting this afternoon to "tell financial analysts how it expects to remake itself as a leader in the booming Web and wireless publishing realm."

Earthlink climbed 1 1/2 to 8 5/8. The 17% gain for Earthlink was due, according to Reuters, to a newspaper report that "the Atlanta-based Internet service provideris main rival (AOL) might be forced to open access to high-speed cable lines."

IBMis PC division edged back into the black in any otherwise anemic quarter for the computer giant. Bloomberg reported, "IBMis worldwide market share in PCs for the third quarter was 7.2 percent, placing it fourth behind Compaq Computer, Dell Computer and Hewlett-Packard, according to Gartneris Dataquest unit. In the year-ago period, IBM held 7.7 percent of the market." IBM climbed 3/16 to 100 5/16.

Motorola lost 13/16 to 42 11/16. The maker of PowerPC coprocessors for Apple is expected to sell $1.0 billion in 10-year notes as early as this week, dealers said on Monday.

Dell lost 1 1/16 to 31 1/2 ahead of Thursdayis 3rd quarter earnings announcement. It was a lousy day for PC stocks. Compaq lost 1.29 to 29.80. Gateway shed 2.45 to 47.95.

Microsoft gained 1 1/4 to 69 1/2. The stock board chatter is that Microsoft investors are betting George Bush will win tomorrow and install MS friendly leadership at the Department of Justice.

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 updated Apple Stock Watch Special Report.

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