Is the Nasdaq in a Stealth Rally? AAPL Comes to Life

A second day of profit taking racks the Dow and once again the Nasdaq couldnit take decisive leadership. Nevertheless, Appleis stock came back from the dead to climb more than 3.5%.

Hewlett Packard released its Q3 earnings result after the bell. HWP reported earnings of $0.97 crushing estimates of $0.85 per share. Revenues came it a bit low at $11.8 billion. The company also announced a two for one stock split.

Corning Glass (GLW), a fiber optic manufacturer announced a 3 to 1 stock split. Both Corningis and Hewlett Packardis stock soared in after hours trading, which could expand into a contagious rally tomorrow morning in related tech stocks.

Apple rallied 1 13/16 to close at 48 1/2 on below average volume of 2.5 million shares.

After flirting with support in the mid-$40 range for ten sessions you have to wonder if AAPLis chart has painted a double-bottom poised for a break out once Wall Street gets back from vacation. The volume is too low to claim todayis uptick as the pivot point.

A Bloomberg news article about Omni Industries, a Singaporean electronics part manufacturer, reported rapid growth and incidentally mentioned that Appleis orders from Omni Industries remains steady while part supplies are tight. "Omni said the worldwide component shortage has hurt costs but declined to elaborate. It now has to order the parts from suppliers as much as 45 weeks in advance, from eight weeks a year ago."

The Nasdaq climbed 9 points to closed at 3861 on volume of 1.3 billion shares.

Without strong volume the real market action is hard to separate from noise, giving investors few clues to which way the market will go next. The Nasdaq had four days of blunted rally. Today the index rose to a resistance zone at 3915 and then retreated.

The Semiconductor rally continued for a forth day gaining 12 points to 1073, driven by earnings from Analog Device (ADI) which reported earnings of $0.43 well above estimates of $0.37 Analysts now claim the Semiconductor cycle is alive and well, with at least another 18-months of stronger demand ahead.

The Dow fell 58 points (0.53%) to close at 11008 on volume of 931 million shares. Retail stocks continued to suffer on the anticipation of a slow down in consumer demand.

The S&P 500 dropped 4.58 points (-0.31%) to close at 1479.85.

In Apple related businesses: Akamai climbed 1/8 to 75 3/16. Adobe fell 4 3/16 to 115 15/16. Earthlink continued to set new 52-week lows for the third day in a row down 3/16 to 9 5/8. Motorola gained 11/16 to 36 9/16.

IBM fell 1 3/8 to 120 5/8. The company said today it, "plans to invest $100 million in life-sciences technology over three years, in a bid to capitalize on what it sees as a $9 billion market opportunity. IBM said the money will be used to develop information technology and to pursue partnerships thatill hasten the interpretation of genetic code."

Corelis (CORL) controversial CEO Michael Cowpland was finally "voted off the island", according to worldinvestor.com story. Mr. Cowpland has resigned his position at Corel. The Canadian software design firmis stock rose 7/32 to close at 3 7/8.

Appleis competitors: Dell gained 3/8 to 38 7/16. Gateway was higher by 1/16 to 62 dollars. Compaq gained 3/4 to 32 5/8. Shares of Intel climbed 3/16 to 68 1/16. Hewlett Packard gained 9 dollars to 120.

Microsoft slipped by a dollar to 71, perhaps due to a negative report by the Gartner Group about the ubiquity of security flaws in Microsoftis products combined with the ongoing LinuxWorld Expo, which seems to be making inroads into businesses that were formerly NT or Windows only.

In economic news: The Consumer Price Index (CPI) rose exactly as expected by 0.2% in July slowing from the 0.6% in June. Meanwhile, housing starts declined by 3.3% in June to its lowest level since November of 1997.

Todayis numbers combined with the slowing retail sales, strong productivity and a tame stock market seem to guarantee that the Federal Reserve will not raise interest rates for an eighth time in 15 months later in August. Inflation is well under control and the US economy is decelerating as hoped. Now we need to cross our fingers and hope that the US economy can make the so-called soft landing promised by Fed Chairman Alan Greenspan.

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.