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Intel, Home Depot Weigh On Stocks

Concern about earnings at Intel and Home Depot dragged down stocks on Tuesday, and a report showing weakening consumer expectations didn't help.

The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped less than a point to 123, and the Nasdaq lost 9 to 1652. The S&P 500 fell 9 to 1074, and the Dow dropped 122 to 9981. Volume rose to 961 million shares on the NYSE, and 1.31 billion on the Nasdaq. Decliners led 18 to 13 on the NYSE, and 19 to 15 on the Nasdaq.

After the close, Novellus slipped after saying it expects to exceed second-quarter guidance, but the company declined to provide third-quarter guidance.

During the day, Intel fell 1% on negative comments from Lehman analyst Dan Niles, who said the company is likely to lower guidance June 6, and Merrill Lynch lowered estimates on the chip giant.

DiamondCluster fell 14% on a downgrade based on the company's options exchange program.

Tower Semi climbed 6% after raising estimates.

Open Text fell 10% on a downgrade based on competition from SAP.

Scwab climbed 2% after a bullish cover story in Barron's.

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.

The S&P 500 (first chart below) looks suspiciously like a bear flag over the last few weeks. 1072, the lower trendline, looks like a critical support for tomorrow. Duplicating the initial 125 point move down would give a target of 950-980, or essentially a retest of the September lows. 1080, 1085 and 1088-1091 are resistance. A couple of points in the bulls' favor are the high put-call ratio, which closed at 1.07 today, and the end-of-the-month/start-of-the-month rally period, which could give the market a positive bias for the next few days. The Nasdaq (second chart) and the Dow (third chart) look like they've already broken down out of bear flags, but the S&P is usually the index that predominates. Support on the Nasdaq is 1640 and 1600, and resistance is 1680 and 1696. The Dow has support at 9900 and 9800, and resistance at 10,100.

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