Stocks Fall Again

Stocks plunged again on Monday, led lower by cautious comments from Cisco Systems and an earnings warning from Ericsson.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 14 to 234, and the Nasdaq dropped 73 to 1979, adding to its worst-ever bear market. The S&P 500 lost 31 to 1201, 20 points into bear market territory, and the Dow plunged 237 to 10,407. Volume rose to 507 million shares on the NYSE, but declined to 910 million on the Nasdaq. Decliners led 20 to 8 on the NYSE, and 27 to 6 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.

Cisco fell 1 1/2 to 19 1/4. After the close on Friday, CEO John Chambers said the company has no earnings visibility, a tactic that has helped the company avoid issuing an explicit earnings warning. Several analysts complied by lowering estimates on the company. Ericsson plunged 2 1/16 to 6 5/16 on its own earnings warning.

Optical and networking stocks were hit by negative comments downgrades by analysts. Ciena , on of the highest flyers in the sector, plunged 7 1/2 to 57 1/2, but 6 points off its low. Juniper lost 3 3/16 to 51 11/16. Corning fell 2.86 to 24.15.

eBay lost 5/8 to 33 3/8, as investor ignored an alliance with Microsoft webMethods , up 2 1/2 to 28 3/16, and i2 , up 1 5/8 to 21 1/8, announced an alliance. B2B stocks were strong in general. Ariba climbed 3/4 to 12 1/4, and Commerce One tacked on 61 cents to 11.61, as the Nasdaq began its three-week transition to decimal trading.

Check Point found buyers, up 7/16 to 67 3/16, 6 points off its low.

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 met its downside target of 1950 based on its break of a bear flag at 2200 on Thursday (first chart). The index's decline here is being halted by the lower trendline of what could be a falling wedge (second chart), with the lower line touching on the December and January lows; that makes 1944 or so pretty important support. The next strong support on the index isn't until around 1800, but the Nasdaq is due to turn up in the next day or two, and the last two down days look like potential exhaustion gaps, meaning sellers could be running out of steam. To the upside, the upper boundary of that falling wedge is around 2100, and next resistance around is 2252.

The S&P 500 broke critical 1214 support today, but is so far finding support around 1190, the July 1998 high. Next strong is around 1130, and to the upside, resistance could be found at 1214 and then in the 1230-1240 range.

The Dow is once again testing critical support at 10,300; a close below 10,292 could lead to a retest of the index's lows in the 9600-9700 area, although 10,200 or so could also provide support. To the upside, 10,450-10,