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Stocks Battered On Anthrax, Earnings Worries

Stocks were battered Wednesday on worries over corporate earnings and continued anthrax attacks.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 10 to 141, and the Nasdaq plunged 75 to 1646. The S&P 500 lost 20 to 1077, and the Dow fell 151 to 9232. Volume rose to 1.44 billion shares on the NYSE, and 2.28 billion on the Nasdaq. Decliners led by 19 to 11 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, Texas Instruments , Apple and Newport beat estimates but warned; Symantec and Mercury Computer beat estimates; AMD met estimates but warned; Siebel missed estimates but reaffirmed guidance; Travelocity met estimates and raised guidance; Handspring and Commerce One missed estimates; Broadcom beat estimates but provided little guidance; WebEx topped estimates; and Extreme met estimates.

During the day, news that 30 Senate staffers had tested positive for anthrax rattled traders. In an unprecedented move, the House shut down a day early on the scare.

IBM rose 1.05 to 102.90 after topping lowered estimates by a penny and missing revenue estimates, and reaffirming fourth-quarter estimates. Intel lost .39 to 24.57 after the company said it expects that the fourth quarter won't be as strong as hoped.

EMC plunged 2.24 to 11.21 after missing estimates. Internet Security , up .34 to 21.85, topped estimates and raised guidance.

AOL fell 2.69 to 30.81 on disappointing results and conference call.

Earnings reports in general led to big losses, even for companies matching estimates. RealNetworks , Rambus , RF Micro Devices , Mercury Interactive , Veritas and i2 fell 10%-24% on their earnings reports.

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

One heck of an ugly reversal today, and the ugliest of all belongs to the Nasdaq, but only because all Nasdaq issues open for trading at the same time. If not for the delayed openings on the NYSE, the Dow and S&P would have looked just as bad. The Nasdaq (first chart below) formed a bearish engulfing or outside reversal candlestick on high volume, and entered its island reversal gap from last week at 1641-1649, another negative sign. Any move down tomorrow, particularly on a gap down, would be a negative, and would set up a test of the main uptrend line around 1580. First resistance on the Nasdaq is 1675 and then 1702. The Dow and S&P, on the other hand, have no uptrend lines left (see second and third charts below). First resistance on the Dow is 9309-9344. First support is 9200 and then 9000. On the S&P, first resistance is 1091, and first support is 1071-1075 and then 1052. The rally off the September 21 lows was strong enough to make that low a potential intermediate-term bottom, with five clear waves off the lows. Here's a potential cycle roadmap for the market: a correction giving back one-half to two-thirds of the recent rally, with a higher low forming around November 11, and then a rally to a higher high in mid-late December. After that, the most likely scenario is a trip down to the final bear market low in February-May 2002.

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.