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RealTime IT News

Stocks Weak After S&P Earnings Cut

Stocks began the week on a modest down note after several brokerages cut earnings estimates on the S&P 500. A cautious outlook from Adobe didn't help.

The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 3 to 202, and the Nasdaq declined 11 to 2017. The S&P 500 slipped 1 to 1204, and the Dow gave back 14 to 10,401. Volume declined to 905 million shares on the NYSE, and 1.3 billion on the Nasdaq. Advancers led 16 to 14 on the NYSE, but decliners led 19 to 17 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, Expedia rose after beating estimates and raising forward guidance. FreeMarkets climbed after topping loss estimates. But Mercury Computer plunged on an earnings warning.

During the day, Adobe lost 2.56 to 40.50 after saying that its projection of flat growth could be affected by weaker than expected economic conditions.

Brocade rose .42 to 32.10 despite negative analyst comments ahead of the company's Wit SoundView presentation tomorrow.

Wireless stocks were strong on positive analyst comments on the sector. Nokia climbed .43 to 21.63 and Openwave rose .51 to 25.50. Wireless Facilities surged 1.10 to 7.60, breaking out of a three-month trading range on analyst comments that business should pick up in the second half.

Cisco gave up its 50-day moving average at 18.93, slipping .17 to 18.89. Dresdner Kleinwort Wasserstein downgraded the company from Hold to Reduce and cut its price target to $14 from $16.

BEA Systems climbed .37 to 21.90 on a deal with United Airlines.

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

After finally bouncing, GE formed a bearish engulfing pattern today; critical support is 41-42.50. As weve said, it's going to be hard for the market to go far without GE, and indeed, the Dow broke down out of a bear flag today (first chart), with downside potential to critical support at 9950-10,000. To the upside, the Dow (second chart) faces tough resistance in the 10,430-10,475 range, and then again at 10,550. The Nasdaq (third chart) is struggling at a critical resistance level: the downtrend line of a declining channel (the blue lines), and the index may have closed back inside that downtrend channel today after breaking out on Friday. If the index can head back above that line tomorrow, 2045 is first resistance, and then the Nasdaq's main downtrend line is at 2080 (the black line). The 2000 level should now be support. The Philadelphia Semiconductor Index was strong today, but is becoming overbought and due for a pullback in the next day or two. Microsoft started out strong, but finished weak, another negative for the bulls. The one bullish sign for the techs remains the Nasdaq 100 (fourth chart), which could be forming a bullish falling wedge. A strong break above 1700 on the index would look good (a good proxy would be a move above 42.50 in the QQQ tracking stock). The S&P 500 (fifth chart) never met a downtrend line it didn't respect, and the one today at 1209 was no exception. The interesting thing about today's high in the S&P 500 is that the index stopped almost exactly at the rounding top we mentioned last week. Today's high was 1209.5, and the boundary of that rounding top is at about 1209.50 for this week.

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