YAHOO! WEIGHS ON NASDAQ -- SEMICONDUCTOR HOLDRS SURGES TO RESISTANCE -- LINEAR TECH LEADS -- XILINX BREAKS RESISTANCE -- JP MORGAN POWERS FINANCE AND THE DOW -- INDUSTRIAL METALS ALSO SHOW STRENGTH

NASDAQ STRUGGLES AND HOLDS GAP ... Today's Market Message was written by Arthur Hill. John Murphy will be back tomorrow. - Editor

The Nasdaq struggled today as weakness in Yahoo! (YHOO) weighed on the index. The Nasdaq gapped into a resistance zone on Monday and then stalled the last two days. Resistance stems from the January and February highs. Even though the index is trading at resistance and a bit overextended after the six week rally, the gap is holding and price action remains strong. A close below 2490 would fill this gap and make it an exhaustion gap. These are short-term bearish and we could then expect a pullback.

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YAHOO! GAPS TO 200-DAY... Yahoo! was the most active stock on the Nasdaq and the big loser on the day. The stock gapped down and declined over 11% on huge volume. The stock traded choppy after the initial gap and is finding some support around the 200-day moving average. There is also support around 28 from broken resistance and this suggest that the stock may consolidate here before making its next move.

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EBAY TEST BROKEN RESISTANCE... Ebay declined on above average volume, but the decline and the volume were nothing compared to Yahoo!. EBAY is still holding its breakout around 34 and this area turns into support. The weekly chart shows the importance of last week's breakout in EBAY and it should be considered bullish as long as it holds. I am marking the next resistance zone in the low 40s.

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SEMIS HAVE A BIG DAY... The Semiconductor HOLDRS (SMH) surged over 3% on big volume and the ETF is on the verge of breaking resistance. Hmm..... It seems like we've seen and heard this before. Resistance around 35.5-36 extends back to October and this is the fourth attempt to break free. The ETF has been locked in this trading range for over six months and a breakout would provide a nice boost for the Nasdaq and tech stocks. With such a big move today, it should come as no surprise that a number of semiconductor stocks are already breaking out. These are the leaders.

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BUY-BACK NEWS PROPELS LINEAR TECHNOLOGY ... Linear Technology (LLTC) was the big gainer in the Semiconductor group with a massive gap and 10% advance on big volume. The stock reported earnings that were in-line and guidance was not spectacular. However, the company announced that it would accelerate its $3 billion stock buy-back program. $3 billion is relative and Linear Technology has a market cap of just $10.8 billion. Relative to market-cap, this is a huge buy-back and it should keep a bid in the stock for quite a while. This is not quite insider buying, but the decision reflects management's confidence in the stock. On the price chart, the stock gapped up in February and broke resistance. There was a pullback over the next two months and LLTC continued higher today. The next resistance zone is around 39-40.

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XILINX BREAKS ASCENDING TRIANGLE RESISTANCE... XILINX (XLNX) also surged on big volume and broke resistance. The stock surged in January-February and then consolidated with an ascending triangle. These are bullish continuation patterns that form with higher lows and equal highs. The higher lows show demand at higher levels and the equal highs reflect supply. The break above resistance signals a victory for demand and opens the door to higher prices. The next resistance level is around 29-30.

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JPM LEADS THE FINANCE SECTOR AND DOW... The week also belongs to the Finance sector. After a drubbing in late February and early March, the Finance SPDR (XLF) stayed down and underperformed the Dow into April. While the Dow broke above its March high in early April, XLF remained below its March high last week and continued to show relative weakness. All that changed this week as XLF gapped up on Monday and surged above its March high with big volume today. Key components like Citigroup, American Express, JP Morgan and American International insure that the Finance sector plays a big part in the Dow. This finance revival is a big reason the Dow hit an all time high today.

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INDUSTRIAL METALS INDEX HITS NEW HIGHS TOO ... The Goldman Sachs Industrial Metals Index ($GYX) broke to a new high today as well. This index features aluminum, copper, lead, nickel and zinc. Aluminum and copper are the biggest components. On the price chart, the index surged above 475 last year and then began a long consolidation phase. That consolidation phase ended with a breakout at 475 and the index moved to a 52-week high this week. As John Murphy pointed out on Saturday, weakness in the US Dollar Index is boosting commodities and industrial metals are taking their share. Also of note, the PowerShares DB Base Metals ETF (DBB) has been trading just a few months and broke resistance with a gap up in early April.

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