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In the ISDEX in July, there was Wireless Facilities, and then there was everyone else.

WFII led internet.com's Internet Stock Index, the ISDEX, with a 51% gain in July, far outpacing the rest of the field. The runner up was Liberate Technologies, which scored a 21% gain last month on optimism that its cable TV software is gaining acceptance. All told, only six ISDEX stocks (out of 50) scored double-digit gains during July, a month in which the ISDEX lost 17%. The other four were: GoTo.com, up 18%; EarthLink, up 12%; and Hotel Reservations Network and Broadcom, both up 11%.

As we mentioned three weeks ago, WFII at a price-to-earnings ratio of 18 seemed substantially undervalued compared to other technology stocks. The stock is up 57% since then, closing yesterday at $9.39 a share. It still looks cheaper than the average tech stock, but two words of caution are in order. First, the company broke out of a large symmetrical triangle at $7 on Monday (see chart below), which gives the stock upside potential to $10 - it's getting close to that level, and may need to consolidate before further gains. The $7 level should now be support. And second, the company reports earnings next Wednesday, so investors will get a closer look at the company's finances then.

Of the other ISDEX leaders last month, EarthLink is benefiting from access to AOL Time Warner's broadband network and takeover speculation; ROOM is benefiting from strong growth and strength in the online travel sector; and Broadcom is gaining from a rebound in semiconductors. And GoTo is nearing profitability and showing strong growth.

On the downside, Art Technology lost 53% in July on an earnings warning; Excite@Home lost 46% on a disappointing outlook; and i2 lost 44% after breaking down on concern about layoffs and slowing sales. ITWO broke down out of a head-and-shoulders top in June that projected minimum downside to $12 (see chart below).

And finally, stocks are set to rally this morning on a surprise rate cut from the Bank of England (the European Central Bank didn't follow, but no matter). A gap above 2090 on the Nasdaq would negate the bearish rising wedge we mentioned last night and look pretty good. However, we continue to believe that the first half of next week remains a very important period for the market, and is more likely to set intermediate-term direction than any move this week.