Techs get a Boost as Blue Chips Wallow

The NASDAQ index took center stage today, gaining 19.01 in the session to close at 2,490.50 to close within a whisker of a 6 year high reached January 12 of 2,502,82. The last time the NASDAQ had maintained a price of over 2,500 was during February of 2001, at that time in the throes of a major collapse which began in March, 2000.

The 2,500 level is significant because it is nearly half of the all-time closing high on the index - 5,048.62 - of March 10, 2000. Followers of historical prices and Fibonacci numbers will be watching the NASDAQ closely to see if it can surpass the 50% retracement or fail at or around 2,525.

Any positive movement above that level would send a strong signal to investors that tech is fully recovered from the dotcom collapse of 2000 (in reality, it is) and that stocks - especially techs - may be undervalued in this area.

While the NASDAQ was making headlines, the Dow and S&P were flatlining again. The Dow Jones Industrial Average closed up a meager 0.56, with the S&P 500 gaining just 2.02. Once again, the Dow traded in a narrow range of just over 60 points, though the movements were distinct - up in the morning and down in the afternoon - before closing nearly unchanged.

The 30 components were nearly evenly split, with 14 up, 15 down and 1 - Citigroup - unchanged. The biggest move was by Caterpillar (CAT) which gained 1.22 to 65.64.

On the NASDAQ, the big price gains were made by mid-and-small caps like Blue Holdings (BLUE), Wellco Enterprises (WLC), FEI Company (FEIC), Intevac (IVAC), Aspen Technology (AZPN), SWS Group (SWS) and SMC Microsystems (SCMM), all of which gained more than 20% on the day.

In the mania of "irrational exuberance" of the late 1990s, big names such as Yahoo, eBay, Amazon, Cisco and Intel led the way higher. Perhaps today's sampling indicates that smaller, nimbler firms have the keys to growth in the new (post-crash) era of technology.

Volume was on the high side, with advancing stocks outnumbering decliners by a 4-3 margin. The solid gains in tech were influenced by a 3% gain in productivity in the final three months of 2006, while the stagnation in the big caps and blue chips was due in part to oil prices which vacillated from a high of 59.85 to close at 57.71, 1.17 lower.

The pullback in oil can only be seen as a positive and possibly a re-ignition of the downward trend which has persisted since August of last year.