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Nasdaq Rises, Dow Falls; Why This Leading Group Could Have More Left

The stock market was mixed in late-afternoon trading Monday as the Nasdaq composite continued to assert leadership, helped by strength in shares of Micron Technology (MU) and some enterprise software names.

X At 3:20 p.m. ET, the Nasdaq was trading mildly off session highs but still rose 0.4%. The Dow Jones industrial average was near session lows, down 0.5%, weighed by weakness in shares of Boeing (BA) and Caterpillar (CAT). Both lost close to 3%.

Dow component Intel (INTC) also lagged, down about 2%, after the Wall Street Journal reported Friday the chip giant might make a bid for Broadcom (AVGO), which is currently trying to buy Qualcomm (QCOM) in a hostile takeover.

The S&P 500 eased less than 0.1% after rising nearly 0.4% early, while the Russell 2000 small-cap index added 0.2%. Volume on the Nasdaq was tracking very close to Friday's levels in the stock market today. NYSE volume was unavailable.

Enterprise software names got a boost after analysts at the Japanese bank Mizuho hiked price targets on a number of stocks in the group. Salesforce.com's (CRM) price target was raised to 160 from 140, ServiceNow (NOW) to 190 from 160, Splunk (SPLK) to 120 from 110, and Ultimate Software (ULTI) to 270 from 250.

In merger news, Lumentum (LITE) jumped 5% on word that it's acquiring Oclaro (OCLR) for $1.8 billion in cash and stock. A Piper Jaffray analyst said "the combined entity will represent the largest optical component company with expertise in a variety of sectors." Shares of Oclaro soared 28%.

Elsewhere, Micron snapped back after falling 1% Friday in heavy volume. Shares jumped 10% to 59.93 in heavy volume. It cleared a 49.99 alternate entry last week after it had broken out of a double-bottom base with 47.08 entry. It is well-extended from both buy points. In fact, the gain has already hit 20%, which means investors who bought at those levels can think about taking profits.

Enterprise software name Paylocity (PCTY) was another heavy-volume gainer, rising 5% to 55.50. Shares hit a new high and are nearly extended from a 53.30 buy point in a lopsided double-bottom pattern.

On the downside, China Lodging (HTHT) pared losses and edged slightly up to 154.24. It's seeking support at the 50-day moving average as it works on a late-stage cup-with-handle base with a 161 buy point. China Lodging was featured in the latest Earnings Preview column, which highlights potential earnings options trades each week.

The hotel chain ranks No. 6 in the current IBD 50.

The current week is busy in terms of economic data. The latest reading from the consumer price index will be out Tuesday at 8:30 a.m. ET. The Producer Price Index (wholesale prices) is due Wednesday along with February retail sales. Key manufacturing data from the Philadelphia Federal Reserve and the Empire State manufacturing index will be out Thursday, with February housing starts and consumer confidence data due Friday.

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