Stocks Crushed On Gateway, Altera Warnings

Stocks sold off across the board Thursday on earnings warnings from Gateway and Altera.

The ISDEX fell 28 to 384, and the Nasdaq lost 154 to 2552, both new 52-week lows. The S&P 500 dropped 33 to 1308, and the Dow lost 208 to 10,420. Volume surged to 592 million shares on the NYSE and 1.1 billion on the Nasdaq. Decliners led by 17 to 8 on the NYSE and 28 to 8 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

Ariba dropped 4 15/16 to 52 15/16, just above 49 support, after co-founder and CFO Edward Kinsey resigned. He was replaced by Robert Calderoni from adhesive firm Avery Dennison . Commerce One dropped 4 3/8 to 26 5/8, breaking 29 support, and i2 fell 5 7/16 to 85.

Communications chip companies sold off on the warning from Altera , which lost 3 1/16 to 22 7/8. Broadcom declined 4 7/8 to 90 1/8, PMC-Sierra fell 13 1/2 to 90, and Vitesse declined 6 15/16 to 42 1/4.

Juniper Networks bucked the trend, rising 4 1/2 to 120 after announcing an alliance with Ericsson to develop mobile Internet routing products.

Tut Systems dropped 3 7/16 to 7 1/4 on an earnings warning. Stratos Lightwave slipped 1 3/4 to 15 despite beating earnings estimates.

Brocade Communications' better-than-expected earnings helped storage stocks. Brocade surged 10 5/16 to 164 1/16, EMC slipped 2 7/8 to 70 5/16, Veritas rose 1 13/16 to 89 13/16, and Emulex lost 1 to 109 1/2.

NorthPoint Communications plunged 1 17/32 to 15/32 after Verizon terminated its merger agreement with the firm, citing a deterioration in fundamentals.

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The Philadelphia Semiconductor Index continued its descent toward 400 two days after closing below the lower boundary (600) of a 200-point descending triangle by more than the required 2%. However, we do not expect the SOX to hit that number immediately, given that the apex of the pattern is still some time away. A close above 625 would negate the SOX's breakdown.

The Nasdaq reached our downside target of 2530 today, duplicating its 41% descent from 5132-3026 from its second peak at 4289. Could be a good point for a rally, but we're so close to the 1990 logarithmic trendline at 2300-2400 that we'd like to see that line hit to feel comfortable here.

The Nasdaq 100 broke through the lower boundary of its falling wedge, a negative sign.

The ISDEX continues to trade below its broken support line, leading us to believe that it may still have some downside ahead. Based on the size of the broken pattern, the ISDEX could have downside to 320-370. The index has strong support at 375-400. A move above 480 would be a real positive for Net stocks.

The S&P 500 negated its falling wedge breakout today and took out that lower support line at about