A Wild Ride On Wall Street

Stocks battled back from a steep sell-off on Wednesday after Microsoft reaffirmed its full-year earnings guidance.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 4 to 149, and the Nasdaq lost 11 to 1759. The S&P 500 slipped 1 to 1131, and the Dow rose 35 to 10,033. Volume surged to 1.36 billion shares on the NYSE, and 1.94 billion on the Nasdaq. Decliners led 18 to 12 on the NYSE, and 23 to 13 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, Manugistics plunged on an earnings warning.

Microsoft rose 1.60 to 57.70 after reiterating full-year guidance the company had given in July. The company said there was no news in the announcement, but traders bid up stocks anyway.

Intel climbed .57 to 27.42 on hope that tomorrow’s mid-quarter update might be better than expected.

Cisco , off .89 to 14.88, didn’t help matters when CEO John Chambers said half of the Nasdaq 100 might be acquired or go out of business over the next five years.

Hewlett-Packard and Compaq continued to fall on their merger announcement, hitting new five-year lows.

Amazon.com and Yahoo hit three-year lows. Amazon fell .92 to 7.67 on Yahoo’s plans to sell eBooks and rumors that Amazon may seek to raise money. Yahoo lost 1.13 to 10.57 on reports that Vivendi has no interest in acquiring the company.

Investors continued to be nervous about Oracle’s earnings report on September 13. Robertson Stephens trimmed estimates by a penny to 6 cents, 2 cents lower than the consensus estimate of 8 cents.

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

You might think the market’s comeback today was a positive, but at least for the Nasdaq it wasn’t. Coming back from a steep sell-off only to finish in the red forms a short-term negative candlestick pattern called a “hanging man” (see #1 in the first chart below). Also in that chart, note the gap filled today at 1745 from April 9 (#3) and the unfilled gap from the April 4 low from 1639-1709 (#4). Selling stopped at 1715 today, just above that gap. A move below 1700 would likely lead to a retest of that April 4 low of 1619-1639. To the upside, first resistance is 1777, and then 1833-1843. Also, one last look at yesterday’s Nasdaq action (#2): the index had a failed rally, completely engulfed the previous day’s trading, and closed at the low of the day and below the previous day’s low. Quite a feat for a single trading day. The Nasdaq 100 (second chart) came within half a point of filling its April 4 gap today at 1370.75, another point in favor of a retest of today’s lows. There wasn’t much to like in the broader market, either: Breadth was very negative on both exchanges today, down volume led up volume by 2-1, and the NYSE and Nasdaq news high/new lows worsened. For the Dow (third chart), critical support is 9869, and key resistance is 10,175-10,200. The S&P 500 (fourth chart) also formed a bearish hanging man today (#1) after a bearish gravestone doji yesterday (#2). Critical resistance is 1156, 1125 and 1115 are support, and below that, the index would fill its April 4 gap at 1103-1110 (#4).

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.

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