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Stocks Mixed Ahead Of Fed Meeting

Stocks were mixed ahead of the Federal Reserve's decision on interest rates on Tuesday. A bankruptcy filing by US Airways also weighed on stocks.

Only one firm, Morgan Stanley, expects a rate cut tomorrow, and traders are evenly divided over whether the Fed will maintain its neutral bias or move to an easing bias.

The Nasdaq edged up fractionally to 1306, the S&P 500 slipped 4 to 903, and the Dow lost 56 to 8688. Volume dried up to 1.03 billion shares on the NYSE, and 1.06 billion on the Nasdaq. Decliners led 17 to 14 on the NYSE, and 17 to 15 on the Nasdaq.

Emulex fell another 8% on top of Friday's 34% plunge on an earnings warning.

Intel lost 2% after Salomon Smith Barney cut estimates.

SpeedFam soared 62% on news that it will be acquired by Novellus .

EDS lost ground on news of $140 million in exposure to US Airways.

Red Hat gained 5% as tech giants rolled out Linux strategies at the LinuxWorld conference.

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 Dow and S&P (first two charts below) formed bearish "hanging man" candlesticks (comebacks that don't quite make it all the way back) right at their May downtrend lines today. Not terribly encouraging for the near-term bullish case. Resistance for tomorrow is 8750 on the Dow and 910-912 on the S&P. 8580 and 890 are first support, and 8350 and 870 are critical supports. The Nasdaq (third chart) has broken its May downtrend, but with volume low and new highs not expanding, we don't expect it to hold. 1280 is critical support for tomorrow, and 1315-1325 is resistance (see broken uptrend in the hourly chart, the fourth chart below). Finally, the Dow Transports (fifth chart) may be putting in a lower high, a potential bearish non-confirmation under Dow theory, which states that the Dow and the Transports rise together in a healthy market.

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