Earnings jitters continued to weigh on technology and Internet stocks on Monday, a day ahead of Cisco’s earnings report and a Sun Microsystems analyst meeting.
The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 9 to 377, and the Nasdaq fell 60 to 2600. The S&P 500 slipped 4 to 1345, and the Dow rose 64 to 10,928. Volume declined to 410 million shares on the NYSE, and 725 million on the Nasdaq. Decliners led by a few issues on the NYSE, and 21 to 12 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.
Traders continued to worry about tomorrow’s earnings report from Cisco , down 1 5/8 to 33 7/8. Analysts have cut earnings estimates to 19 cents a share after two stealth warnings from the company last month. Sun Microsystems
, off 1 7/16 to 27 3/4, meets with analysts tomorrow.
PurchasePro fell 4 5/8 to 20 1/2 after an article in Barron’s questioned the company’s business model and valuation. The company issued a strong defense, and SG Cowen reiterated its Buy rating on the stock. Ariba
lost 2 3/4 to 31 3/8, a new 52-week low, and Commerce One
dropped 2 to 27.
Palm dropped 1 5/8 to 21 9/16 after Wit SoundView said the company’s February quarter may be a little weak.
Juno soared 3/4 to 2 19/32 on speculation that Microsoft
could make a play for the company.
MicroStrategy edged up 3/4 to 16 3/16 on a deal with FleetBoston Financial.
Redback Networks surged 3 5/8 to 43 7/8 on a multi-year deal with Qwest.
JDS Uniphase declined 2 5/16 to 47 11/16 after Deutsche Bank Alex. Brown lowered earnings estimates but said the imminent approval of the company’s merger with SDL
could clear up uncertainties.
Exodus fell 4 1/8 to 19 1/16 after announcing that it will issue 13 million common shares and $500 million in convertible notes.
China.com dropped 13/16 to 5 3/4 after announcing that it will write down $70 million against fourth quarter results.
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
We like what we see here – if the Nasdaq and Nasdaq 100 can hold around their lows of this morning (2600 on the Nasdaq and 2400 on the Nasdaq 100). The Nasdaq (first chart) is holding around its September 1 logarithmic downtrend line, and could be reforming a steeper rising channel (the gray lines). While the Nasdaq 100 (second chart) has broken back below its September log downtrend line, a negative, the big techs are finding support on the lower boundary of a rising channel. And both indexes finally filled those pesky gaps, at 2618.55 on the Nasdaq and 2470.72 on the Nasdaq 100, removing those downside lures. A rocky market since the January 3 lows, but the chart picture appears to continue to favor the bulls, if the Nasdaqs can reverse soon. And the outperformance of the Nasdaq relative to the Nasdaq 100 could indicate broader-based buying for a change, another point in the bulls’ favor. One negative is that the Philadelphia Semiconductor Index is 5% lower today; since the semis tend to lead the Nasdaq, th
at’s one index to keep an eye on. The ISDEX (third chart) is below 380 support, a negative for Net stocks.
The S&P 500 is well above any critical support. The closest, the lower rising channel boundary, is around 1330.
The Dow continues to meet with resistance at its September downtrend line (first chart, not updated today due to a data glitch). To the downside, we expect that lower trendline at about 10,650 to hold, if the Dow gets that low. A close above 11,007 would be bullish under Dow Theory, the oldest school of technical analysis, particularly if the Dow Transports can stay above 3000; the Trannies continued to hold comfortably above that level.
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