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Stocks Can't Muster A Rally

The stock market couldn't hold an early rally after Monday's steep decline, and finished the day in the red.

The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 5 to 125, and the Nasdaq fell 24 to 1555. The S&P 500 lost 6 to 1032, and the Dow slipped 17 to 8903. Volume declined to 1.67 billion shares on the NYSE, and 1.86 billion on the Nasdaq. Decliners led 19 to 12 on the NYSE, and 22 to 14 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, TriQuint Semiconductor rose after reaffirming guidance.

But semiconductors were weak during the day, and equipment leader Applied Materials hit a new 52-week low.

If not for a strong gain in Microsoft , up 1.41 to 54.32, the Nasdaq would have been down even further.

eBay tacked on .60 to 50 after reaffirming estimates.

Sonus lost 2.36 to 7.85 on rumors that the company could lose a contract with Qwest .

Siebel fell 1.94 to 14.77 on claims that it had lost a contract to Oracle , but analysts said the news was old. Oracle gained .37 to 11.38 despite a lackluster conference call.

Rambus rose 1.12 to 7.77 on a new agreement with Intel .

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

As we said a couple of weeks ago, an oversold market that refuses to rally can be said to be crashing, and that is essentially what is going on here. The indexes are deeply oversold, but stocks can't put together the most basic rally. We'll look at intraday charts today for clues as to the next move, and what we see on the three major indexes are consolidations at the lows that are breaking down (see first three charts below), which suggest that yesterday's big down moves could be duplicated. Based on those charts, the Dow has resistance at 9000, the S&P at 1038, and the Nasdaq at 1580. A move above those levels would be a plus. Some potential supports: The Dow has significant support at 8600-8800, then at 8200-8300, and then 7500-7800. The S&P has potential support at about 1010, then 980, and then 920. The October 1998 lows of 920 on the S&P and 7500 on the Dow would likely represent a good buying opportunity if we get that low; the market seems to want to go there. The Nasdaq could find some support in the 1500-1540 area, and then 1419-1430. The October 1998 low was 1357. Two big negatives: the Dow Transports (fourth chart) and the Philadelphia Semiconductor Index (fifth chart) both hit new lows today.

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.