Amazon Tops Estimates, But Trades Lower

Amazon.com beat earnings estimates after the close on Monday, but the stock traded down after the company lowered forward guidance. Stocks fell during the day on the lingering effects of Microsoft’s warning.

The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped 2 to 200, and the Nasdaq lost 40 to 1988. The S&P 500 lost 19 to 1191, and the Dow fell 152 to 10,424. Volume dropped to 973 million shares on the NYSE, and 1.3 billion on the Nasdaq. Decliners led 19 to 11 on the NYSE, and 22 to 14 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, Amazon lost 4% on top of bigger losses during the day after topping estimates by 6 cents with a 16-cent pro forma loss, but revenues came in light, and the company guided forward revenue estimates 10%-15% lower. The company is sticking to its target of pro forma profitability by the fourth quarter, and it also announced an investment of $100 million from AOL .

Also after the close, Openwave rose after topping estimates by a penny with 11-cent earnings and maintaining its full-year outlook of 43 cents a share, Texas Instruments warned, and Altera and Onis matched estimates.

Microsoft fell 2.03 to 67.15, extending a two-day slide after guiding down next quarter’s earnings estimates. Microsoft filled a gap at 66.50, and barely held onto its December uptrend, which also looks like a bearish rising wedge.

NVIDIA plunged on rumors that Microsoft’s Xbox could be delayed, and on word of a Sony-led effort to promote open standards for video.

Check Point rose .93 to 36.35 after beating estimates by a penny with 33-cent earnings.

Hotel Reservations Network rose 1.85 to 49.85 after beating estimates by 3 cents at 26 cents a share.

Cisco climbed .28 to 18.27 on UBS Warburg comments that the company may have made its quarter, and without a big sales push too.

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A quote from Friday’s market close: “The only weak sign was a poor showing from chip companies, which usually lead the market, not follow it.” Well, we’ll get that one out of the way first tonight: the Philadelphia Semiconductor Index closed down 3%, more than the Nasdaq’s 2% loss, so tech stocks could face more weakness ahead. It wasn’t a hopeful sign for this morning’s rally when Microsoft was selling off while the market was rallying. The Nasdaq (first chart) is an interesting study in trendlines. It could be forming a bullish falling wedge (the black lines), or a steepening downtrend (the blue lines). So far, the steepening downtrend seems to be winning, as that upper blue trendline provided resistance today. A move above 2050 would be a plus, and 1972, a gap created when the Microsoft news was believed to be good, is next support. Below 1972, the index could be headed for 1900. The Dow (second chart) has all but removed any semblance of an inverted head and shoulders bottom with today’s sell-off, and could be headed for a retest of 10,100-10,250. A move above 10,700 would look good. The S&P 500 (third chart) fell back below its downtrend line and broke 1200 support in the same day, not pretty. A gap at 1180-1197 could provide support, and 1200 is now first resistance. About the only good news is that volume was very light today.

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