Stocks Plunge On HP Warning, Election Uncertainty

An earnings warning from Hewlett-Packard, coupled with continued uncertainty over the outcome of the presidential election, sent stocks plunging on Monday.

The ISDEX dropped 42 to 510, its lowest level of the year, and the Nasdaq fell 150 to 2878, a level not seen in more than a year. The S&P 500 lost 35 to 1330, and the Dow plunged 215 to 10,387. Volume rose to 479 million shares on the NYSE and 869 million shares on the Nasdaq. Decliners led by 18 to 7 on the NYSE and a whopping 5 to 1 on the Nasdaq. The Federal Reserve meets Wednesday, and the Consumer Price Index will be reported Thursday. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

All 50 ISDEX stocks traded lower, led by Portal Software , off 5 3/8 to 22 7/8.

Ariba broke support at 100 and plunged 11 1/2 to 89 on an Upside Today story questioning EDS CoNext, the joint venture between Ariba and Electronic Data Systems . Commerce One lost 6 13/16 to 51 1/8, and i2 dropped 21 11/16 to 113 1/2.

Streamline.com , which was halted unchanged at 5/32, became the latest e-tailer to shut down.

Entrust , off 4 to 22, announced the resignation of CFO David Thompson, who will join TrinTel Communications.

Even good news didn't help stocks. InterNAP , off 1 1/2 to 15 1/8, was added to Chase H&Q's Focus List and upgraded to Strong Buy.

coolsavings.com , off 1/16 to 1 3/16, issued an earnings warning but said it expects to achieve profitability in the second half of 2001.

Juniper Networks continued to struggle, off 12 7/16 to 158 1/2. Technical note: The stock on Friday broke a broadening top, as previously noted, with downside potential to 120. A close above 180 would negate the breakdown.

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The Nasdaq 100 reached its downside target of 2700 (2742) this morning, based on the breakdown out of a bear pennant last week. The Nasdaq is sitting at what could be strong support, a line across the 1996-1998 tops and the 1999 lows. Also, the index filled a gap from October 1999 at 2875 this morning, another sign that this support could hold, if only for a day or two.

We continue to be concerned about the S&P 500's repeated piercing of its 1994 logarithmic trendline, which is at 1369 this month. If we close below that line by more than 2%, or 1335, we may have seen the end of the bull market. The next major trendline, the 1984 trendline that marked support until 1995, is below 1000 on the S&P 500. A retest of the 1998 lows would touch that line. Not that we would necessarily go that low, but the index's bearish behavior at this important trendline has us worried. Is this the start of a major bear? Time will tell, but keep in mind that markets often turn around when it seems darkest.

The ISDEX is forming a potential broadening bottom, and touched that lower trendline at 510 today. An unusual bottoming formation, but a potential positive on the index.

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