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Dell Slips On Earnings Warning

Stocks staged an impressive comeback from steep losses on Thursday, but an earnings warning from Dell after the close could put modest pressure on stocks on Friday.

The ISDEX http://www.wsrn.com/apps/ISDEX/ was unchanged at 181, and the Nasdaq added 11 to 1930. The S&P 500 climbed 3 to 1181, and the Dow gained 46 to 10,392. Volume rose to 1.06 billion shares on the NYSE, and 1.61 billion on the Nasdaq. Advancers led 16 to 13 on the NYSE, but decliners led 18 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 bell, Dell slipped after matching estimates with 16-cent earnings, but guided third-quarter earnings down from 17-cent estimates to 15-16 cents, and said it doesn't see a recovery until the first quarter or two of next year. Also after the close, Hewlett-Packard rose after topping lowered estimates with 5-cent earnings.

During the day, the Consumer Price Index fell for the first time in 15 years, once again raising deflation concerns.

Ciena plunged 8.44 to 19.68 after slashing 2002 growth estimates from 50% to 15%.

1-800-Flowers slipped .35 to 13 after reporting 2-cent pro forma earnings, 6 cents better than estimates.

Brocade dropped 2.40 to 27.94 on an earnings warning.

Broadcom fell 2.12 to 39.90 after 3COM sued for non-payment of interest.

Comverse rose 2.67 to 29.42 on bullish comments from Goldman Sachs.

eBay clawed back after breaking critical 60 support to gain 1.01 to 61.01.

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

A nice recovery today, and several leading stocks came back from the brink, but it wasn't convincing. Down volume led up volume on the Nasdaq. The TRIN and TRINQ never got below 1.0, let alone below the .80 level that shows real buying pressure. Another negative was that the Nasdaq exceeded the 62% Fibonacci retracement level (1890) of the April 4-May 22 run, which means that the move down became a trend in its own right today. That increases the likelihood that the April lows (1619) will be revisited at some point. On the plus side, fear reached some healthy levels today, so a short-term bottom here is a possibility, in time for that new moon turn tomorrow-Monday. But the main feature of today's action was the pierced support - and subsequent recovery - of some pretty important support levels. That's both good news and bad news, because piercing can be a prelude to an outright support break. The Nasdaq (first chart) gapped below a pretty significant trendline on the open, but closed back above it. That line should be at about 1910 for tomorrow. 1940 is first resistance, and 1960 is the level to beat (second chart). The Nasdaq didn't quite hit its lower falling wedge trendline at about 1860 in that second chart, finding support at 1879. But at its simplest, the Nasdaq continues to set lower highs and lower lows - the very definition of a downtrend. The Dow (third chart) and S&P (fourth chart) are still holding their July lows of 10,200 and 1165, so the broader market is okay for the time being. The Dow's direction will likely be guided by a break of 10,200 to the downside or 10,500 to the upside. The S&P faces a whole lot of resistance between 1185 and 1200. 1165 is critical support.

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