Greenspan Sends Stocks Lower

Fed Chairman Alan Greenspan dashed hopes that the Fed will continue to cut interest rates aggressively in testimony to the Senate Banking Committee on Tuesday. Stocks rose ahead of Greenspan’s testimony, but fell sharply by the close.

The ISDEX fell 12 to 340, and the Nasdaq dropped 61 to 2427. The S&P 500 lost 11 to 1318, and the Dow declined 43 to 10,903. Volume rose to 1.07 billion shares on the NYSE, but declined to 1.72 billion on the Nasdaq. Advancers led 15 to 14 on the NYSE, but decliners led 21 to 16 on the Nasdaq. For earnings reports, visit our earnings calendar at and reported earnings at For after hours quotes and news, visit our after hours trading site at

After the close, Sycamore Networks , Applied Materials and beat estimates.

During the day, Greenspan told the Senate Banking Committee that the “exceptional weakness” in the economy that occurred in December that prompted the most aggressive rate-cutting by the Fed since 1982 did not continue into January. That cooled traders’ hopes for another 50 basis point rate cut in March. The Fed lowered growth estimates for the year from 3.25-3.75% to 2-2.5%.

PurchasePro blew out estimates by 12 cents with 11-cent earnings, and raised full-year estimates from 37 cents to 50 cents. But the stock lost 3/64 to 15 7/8 after trading as high as 20 7/16 on the news. B2B spending received a positive mention in Greenspan’s speech, but B2B stocks fell anyway. Ariba lost 1 3/8 to 22 1/2, Commerce One declined 1 5/16 to 23, and i2 fell 1 15/16 to 38 3/8.

Check Point lost 1 3/8 to 82 5/16 after trading as high as 90 5/8 after splitting 3-for-2.

OpenMarket lost 25/32 to 2 7/8 after reporting a 39-cent loss. MarchFirst , down 7/8 to 1 5/8, missed estimates and issued an earnings warning.

Nortel lost .82 to 29.75 despite news of several contract wins in China.

InfoSpace dropped 1 1/32 to 3 31/32 after saying it expects to return to profitability in the third quarter, but analysts were concerned about earnings visibility. , up 1/16 to 5/8, and Entrust , down 2 1/2 to 11 5/8, announced CEO resignations.

Juniper , off 15/16 to 78 15/16, Extreme Networks , up 1 11/16 to 32 3/8, and Avici , off 3 1/16 to 20 13/16, all received positive comments from Merrill Lynch.

CMGI , off 1/2 to 5 1/32, said online advertising weakness may continue for another 1-2 years.

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:

The Nasdaq closed the day right on its 1990 logarithmic trendline (first chart), critical support for the index. That line is probably the single most important support for the bull market of the 1990s, and a line we do not want to see definitively broken. A close of 2350 or so would be enough to break that line. The good news is that we hit that line on lower volume today, but the bulls need to step in and start buying soon. To the upside, the Nasdaq ran into resistance at its September logarithmic downtrend line around 2550 this

morning (second chart).

The S&P 500 appears to be reforming its rising channel, but once again dropped to the lower end of that channel, back below previous support (the gray line).

The Dow once again was turned back at 11,000 resistance, at what could be the upper boundary of a bullish ascending triangle, with upside potential to 11,700 to 12,300 if it can take out 11,000 with any force. 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 continue to hold above that level. But the 11,000 level has been one tough obstacle for the Industrials, reflecting its importance to the health of the market and the economy as a whole. To the downside, we want to see the Dow stay above that lower trendline at about 10,750.

Special report: For a free introduction to technical chart patterns and an overview of last year’s action in the stock market, visit,1785,2571_500051,00.html.

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