Techs, Nets Lag Blue Chips

Technology and Internet stocks lagged blue chip issues on Monday, as traders awaited a Capitol Hill appearance by Fed Chairman Alan Greenspan on Tuesday.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 2 to 347, and the Nasdaq fell 17 to 2453. The S&P 500 rose 7 to 1321, and the Dow surged 97 to 10,878. Volume was unchanged at 435 million shares on the NYSE, and 845 million on the Nasdaq. Advancers led 16 to 12 on the NYSE, but decliners led 17 to 16 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.

An earnings warning from Emulex , which plunged 37 1/8 to 40 3/8, weighed on storage and infrastructure stocks. EMC lost 3.92 to 52.48 on rumors of a weak January, Brocade fell 13 5/8 to 60 1/2, and QLogic plunged 20 3/16 to 50 3/16. Network Appliance fared better, losing only 1 1/2 to 36 1/2. Traders believe the company may be stealing business from others in the space.

Juniper slipped 4 3/8 to 79 1/2, Sonus lost 4 11/16 to 34 9/16 on an analyst downgrade, and Ciena fell 7 1/2 to 72 3/8.

Inktomi rose 1 1/16 to 13 15/16 on a deal with Reuters.

Liberate dropped 2 1/16 to 12 1/4 on a Deutsche Bank Alex. Brown downgrade on concerns about deployment delays.

Amazon.com added 5/8 to 14 after Merrill Lynch and CS First Boston came to the stock's defense. Merrill analyst Henry Blodget said he expects the company to have $850 million in cash to pay year-end bills.

BroadVision lost 1/2 to 10 3/4 after CS First Boston cut estimates after channel checks revealed a slow start to the quarter.

Some technical comments on the market: Note: We are now including 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

The Nasdaq (first chart) found support at its 1990 logarithmic trendline this morning, a line where the Fed has defended the market in the past. It would be a real plus for the bulls if the index can hold that line, and a real negative if it can't. To the upside, the Nasdaq needs to get back above its logarithmic downtrend line from September at about 2550 (second chart). A quick word on fundamentals: one point where fundamental analysis approaches the predictive value of technical analysis is in the measure of a stock's historical trading range. One approach we are fond of was outlined in Ken Lee's book Trouncing The Dow. A year ago, that approach labeled Cisco Systems a sell at about $72, meaning that was as high as the stock could reasonably trade given its earnings and growth rate. So where does that system rate Cisco a buy? At 25 1/4, or about 10% down from here. It doesn't mean that Cisco can't exceed that price to the downside, just as it exceeded its upside price by about 15%, but it is intriguing to note that the market's acknowledged leader is entering a zone where buyers have historically stepped in to support the stock.

The S&P 100 (first chart) and S&P 500 (second chart) may be reforming their rising channels, a hopeful sign. The