Cisco Spoils The Party

A warning from Cisco Systems sent stocks sprawling on Thursday.

The Nasdaq fell 42 to 1376, the S&P 500 dropped 21 to 902, and the Dow lost 184 to 8586. Volume declined to 1.45 billion shares on the NYSE, and 1.76 billion on the Nasdaq. Decliners led 21 to 11 on the NYSE, and 21 to 10 on the Nasdaq. Downside volume was 80% on the NYSE, and 83% on the Nasdaq. New highs-new lows were 16-22 on the NYSE, and 37-31 on the Nasdaq.

After the close, Qualcomm rose on better than expected results and guidance. NVIDIA topped estimates but lowered guidance.

During the day, Cisco fell 4.7% after beating earnings and revenue estimates, but guiding forward estimates lower. The company said service provider spending remains tough, but that there is promise in the security, IP telephony, storage, wireless LAN, and data, voice and video convergence markets. News that the company expects switching revenue growth to outpace router revenue growth in the future was no help for Broadcom , which lost 5.8%.

Amazon .com slipped 1% on its holiday shopping outlook. Loudeye soared 32% on news that it will provide Amazon with online music samples.

Microsoft lost 1.8% on a day when the company pinned its hopes on the Tablet PC and lost a wireless deal to Nokia.

Veritas , off 9.5%, is acquiring NTP Software’s Storage Reporter.

Palm , up 13%, struck a licensing deal with Research In Motion .

Intel , off 3.7%, is readying a wireless chip.

China Telecom finally priced its IPO and will begin trading next week.

United Online rose 9.5% to a new 52-week high on better than expected results.

Yahoo and QLogic were hit on valuation concerns.

WebMD rose on its earnings report, but Wireless Facilities , Aether and TMP Worldwide fell on their reports.

Check Point Software lost 5% on Prudential comments that the company may be losing marketshare. Firewall vendors that may be gaining include Symantec , Cisco , Netscreen and Watchguard .

EDS fell 11% on a Wall Street Journal report that Procter & Gamble had ended outsourcing talks with the company.

Some technical comments on the market:

The Nasdaq (first chart below) closed right on its uptrend line today, but that was one of the few positives on the day. 1360 and 1340 are the next support levels, and 1397-1400 should now be resistance. The Dow (second chart) barely held its uptrend today, but the S&P (third chart) did not. Support is 8500-8550 and 8200-8300 for the Dow, and 900 and 875 for the S&P. Resistance is 8800 for the Dow and 924 for the S&P. One negative today is that, while still high at .73, the equity-only put-call ratio fell along with the market, indicating that equity option traders were too eager to buy the dip today. The correction would have a better chance of ending if they were showing more fear, as they did on the open today when the ratio hovered around 1.0. Today’s downturn, which came on a cycle turn date, raises the possibility that the general trend may be down into the November 25-26 cycle turn, but high fear and a good washout would be better signs for an end to this correction. The tape feels heavy here, whereas it did not just a few days ago, and one indication of that is that stochastics (see all three charts) made a lower high when the indexes made a higher high and are now giving sell signals. However, we think the market is correcting here and not heading for new lows, but we will keep an eye on downside momentum indicators for any change in that outlook. As always, watch support and resistance for clues.

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