RealTime IT News

Tough Day For Techs

Technology stocks struggled again on Friday, led lower by weakness in IBM and a warning from McData.

The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped 2 to 148, and the Nasdaq fell 19 to 1770. The S&P 500 slipped 3 to 1122, and the Dow rose 36 to 10,271 on a positive preannouncement from 3M, the index's highest-priced component. Volume declined to 1.1 billion shares on the NYSE, and 1.5 billion on the Nasdaq. Advancers led 18 to 12 on the NYSE, but decliners led 18 to 15 on the Nasdaq.

After the close, Loudcloud suspended guidance after the closing of Atriax, one of its largest customers. Ameritrade warned.

During the day, McData plunged 23% after warning, sending the storage sector lower.

IBM fell 3% on accounting concerns.

Legato and Aspen fell on warnings, but Getty Images soared 22% after raising guidance.

United Online surged 16% to a new 52-week high after raising guidance.

AOL recovered after briefly hitting a new 52-week low.

Telecom equipment stocks were weak, led lower by Nortel , which fell 11% to a new 52-week low, and Juniper .

Enterasys plunged 67% on a warning.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the internetstockreport.com story link at the top of the newsletter.

We have a rarity: All three major indexes, the Dow, the S&P and the Nasdaq, are forming very clear down channels (first three charts below). A very nice situation, because you really only need to watch one level: the point where the indexes would break out of the channels. Within the channels, the indexes are likely to just keep drifting lower. For Monday, the indexes would break out at about 1835 on the Nasdaq, 10,335 on the Dow, and 1138 on the S&P. The one hazard is that the Nasdaq keeps threatening to break its channel to the downside, which could lead to a waterfall down; that lower trendline should be at about 1760 on Monday, and 1757 is also a good support level. 1793-1805 is first resistance, and a very tough level at that. The lower Dow and S&P channel lines will be at about 10,100 and 1110 on Monday. 10,170 is first support on the Dow, and the 1119 level is very important support on the S&P. Finally, in the weekly charts, the Nasdaq (fourth chart) had a clear breakdown this week, while the Dow (fifth chart) is hanging on by a thread and needs to get above 10,350 next week to stay above that line. Today through Monday is a potential turn date; a low Monday and then a rally is one possible outcome. But the channels give us very clear levels to watch for when the downtrend ends.




Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.