Fed, War Fears Send Stocks Plunging

Stocks fell sharply Tuesday after the Federal Reserve said the economy may be weakening but did not cut interest rates. Reports of U.S. military maneuvers in the Persian Gulf also weighed on stocks.

The Nasdaq dropped 37 to 1269, the S&P 500 lost 19 to 884, and the Dow fell 206 to 8482. Volume rose to 1.3 billion shares on the NYSE, and 1.64 billion on the Nasdaq. Decliners led 21 to 10 on the NYSE, and 22 to 10 on the Nasdaq.

After the close, Applied Materials slipped after beating estimates but saying that customers have turned more cautious in recent weeks. Network Appliance rose after beating estimates.

During the day, Emulex finally bounced after Friday’s earnings warning, but QLogic undercut its July low of 33.17.

McAfee surged 16% after parent Network Associates raised its bid to 0.675 NET shares and $8 in cash.

Kulicke & Soffa plunged 23% on a warning.

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

The Nasdaq (first chart below) fell back into its May downtrend today on rising volume, a bearish sign. 1263 is first support, and a close below that level would target critical 1192-1200 support, and potentially new lows. To the upside, the index needs to regain 1300 to recover some stability, and then take out 1325, which is now a double top. The Dow and S&P (second and third charts) rolled over at their May downtrend lines in rising volume, a bearish sign. 8400-8450 and 875-880 are critical support, and 8700 and 910 are critical resistance.



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Special report: For a free introduction to technical chart patterns, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.

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