eBay, Juniper Lead Net Rout

Internet stocks were crushed Monday on analyst downgrades to eBay and Juniper Networks.

The ISDEX plunged 43 to 477, a new yearly low, and the Nasdaq lost 151 to 2875. The S&P 500 declined 25 to 1342, and the Dow fell 167 to 10,462. Volume declined to 953 million shares on the NYSE, but rose slightly to 1.72 billion shares on the Nasdaq. Decliners led by 18 to 9 the NYSE and 29 to 9 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

eBay dropped 8 5/16 to 35 1/8 on a Lehman Brothers downgrade to Neutral from Buy. Lehman said eBay's core auction business is slowing, and that newer initiatives will take more time and money to implement than estimated.

Morgan Stanley downgraded the networking sector to Neutral based on capital spending concerns. Juniper plummeted 32 1/4 to 122 3/32, approaching our downside target of 120 based on the break of a broadening top. Redback lost 8 3/4 to 72, and Extreme Networks dropped 8 13/16 to 64 1/2.

Technical note: It's worth taking another look at the Juniper broadening top. A broadening top is usually a series of three higher highs and two lower lows, but can sometimes have a flat top or bottom, and can sometimes go on to make a fourth high. It is considered a major topping pattern, requiring out-of-control trading conditions. Hence, the pattern's appearance last month was a bearish sign even before it broke. The predicted minimum move is the distance from the peak (#5) to the previous reaction low (#4), from that lower point. The pattern is not considered broken until the stock closes below the reaction low by 3%. The Juniper pattern was 65 points in size, from the 244 1/2 peak to the 179 1/2 reaction low, predicting a minimum downside move to 114 1/2. The closing break came a week ago at 164 1/2. The stock rebounded to 184 the next day, slightly above the break point, but not quite by 3%, then declined 30% in four trading days.