Chip Stocks Fall

A warning from Texas Instruments hammered chip stocks on Tuesday.

The Nasdaq lost 16 to 1292, the S&P 500 lost 9 to 890, and the Dow fell 88 to 8450. Volume rose to 1.51 billion shares on the NYSE, and 1.72 billion on the Nasdaq. Decliners led 21 to 10 on the NYSE, and 19 to 13 on the Nasdaq. Downside volume was 69% on the NYSE, and 53% on the Nasdaq.

After the close, KLA-Tencor warned; RealNetworks warned; Overture fell despite beating estimates; Cymer , webMethods and missed estimates; and Computer Associates , Silicon Labs , Storage Tech , Websense , Citrix , NetIQ and CheckFree beat estimates.

During the day, Texas Instruments plunged 18% after missing estimates and warning, sending the semiconductor index to a 6% loss. Taiwan Semi fell 7% after missing estimates.

Cisco rose 2.5% on optimism that the company won’t warn. Cisco reports earnings Nov. 6.

International Rectifier , Veritas and Altera fell on their results, and JDA rose after beating estimates.

Newport fell 22% on a warning.

J2 Global Communications notched a new 52-week high.

BellSouth gained 6% on better than expected results.

Some technical comments on the market: Note: To see the charts in the text email newsletter, click on the story link at the top of the newsletter.

The first negative sign to appear in this rally was today’s mild distribution, a sell-off in higher volume than the day before. But on the plus side, the Dow (first chart) and S&P (second chart) both held their May downtrend breakouts today. Those downtrend lines are now critical support, at about 8365 on the Dow and 882-884 on the S&P. Below those levels, the indexes would have bearish breakout failures. The Dow is facing tough resistance in the 8700-8800 area, and the S&P in the 910-920 area. The Nasdaq (third chart) has resistance at 1315-1320 and 1340, and support is 1267 and 1240-1250. The Nasdaq 100 (fourth chart) has support at 930 and 915, and resistance at 985-1000. The SOX, the semiconductor index (fifth chart), has so far failed to clear its May downtrend line at about 282. Support is 250-260.






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