RealTime IT News

Investors Dump Stocks - Again

More earnings worries, economic weakness in Europe and an apparent end to the GE-Honeywell deal led to a broad sell-off in the stock market on Thursday.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 14 to 226, and the Nasdaq lost 77 to 2044. The S&P 500 dropped 21 to 1219, and the Dow fell 181 to 10,690. Volume rose to 1.22 billion shares on the NYSE, and 1.75 billion on the Nasdaq. Decliners crushed advancers by 21 to 9 on the NYSE, and 27 to 10 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

After the close, JDS Uniphase fell to a new low on an earnings warning, while Adobe was unchanged after topping estimates but providing vague forward guidance.

During the day, the Producer Price Index was tame, continuing to give the Fed room to cut rates, but investors focused on earnings, lower European growth, and the apparent demise of the GE-Honeywell deal at the hands of European antitrust regulators. That makes United Technologies the likely suitor for troubled Honeywell.

It was hard to find a telecom equipment stock that wasn't hit by bad news during the day. Sonus , Nortel and Corning were among those hit by earnings concerns. And rumors that Cisco won a deal with AT&T did nothing for Cisco's stock, which fell 1.22 to 17.80.

The one bright spot was eBay , which climbed 1.89 to 63.70 on analyst comments that the company is seeing more business from corporations.

Exodus dropped 1.04 to 4.97 on WR Hambrecht that the company is likely to miss its numbers and is only worth $4-$5 a share.

Robertson Stephens comments about earnings risk sent shares of i2 and Siebel Systems sharply lower.

Some technical comments on the market: Note: We include charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The market broke down big-time today. About the only good thing to say is that it is short-term oversold and a bounce should start in a day or two. But that bounce is likely to be capped at 1240 on the S&P 500, 642 on the S&P 100, 2100 on the Nasdaq, 1770 on the Nasdaq 100, and 10,870 on the Dow; those are the necklines of the head-and-shoulders tops that broke definitively today (see first five charts below). If the indexes can clear those resistance levels, we'll be pleasantly surprised. A close below 1200 on the S&P 500 and 2000 on the Nasdaq would just about cement the top. The most worrisome thing about the breakdowns is that some key indicators seem to give the market quite a bit of potential downside. Look at that sixth chart below, of the Nasdaq: MACD and PPO have a long way to go to get to the bottom of their ranges, and most importantly, ADX (the arrow pointing to the black line) appears to be turning up from the bottom of its range, which could indicate the beginning of a new trend - down. One bit of potential good news is that the market is due for its next "fix" from the Federal Reserve in less than two weeks - could be good for a rally into the June 26-27 meeting at some point.

Special report: For a free introduction to technical chart patterns and an overview of last year's action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.