Investors Give Fed Thumbs Down

A quarter-point rate cut and a statement from the Federal Reserve that the economy remains weak were met by strong selling by investors on Tuesday.

The ISDEX fell 7 to 166, and the Nasdaq dropped 50 to 1831. The S&P 500 lost 14 to 1157, and the Dow plunged 145 to 10,174. Volume rose to 1.03 billion shares on the NYSE, and 1.32 billion on the Nasdaq. Decliners led 17 to 13 on the NYSE, and 23 to 12 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 was unchanged after matching estimates.

During the day, Microsoft dropped 2.07 to 60.63, back below its 200-day moving average at 62.60. eBay once again broke 60 support, falling 2.67 to 57.83.

Agilent climbed .36 to 26.45 despite an earnings warning.

E*Trade rose .24 to 5.81 on news of insider buying.

Sun Microsystems slipped .32 to 14.01 despite optimism over the company’s August 29 update.

Lucent rose .06 to 6.51 on optical market share gains. The company will hold an analyst meeting Thursday.

VeriSign , off 1.37 to 43.11, continued to slide on fears of market share loss.

Some technical comments on the market: Note: We include charts in the technical market commentary. If you can’t get the charts via the e-mail newsletter version, try this link:

Those bear pennants or rising wedges we mentioned last night worked with a vengeance in the Dow, S&P and Nasdaq (first three charts below). About the only good news is that the market is oversold enough to begin a bounce in the next day or two, and the Nasdaq 100 (fourth chart) is very close to the 1990 trendline where the market bounced in April. We’ll update that chart for tomorrow morning, but it should be around 1450-1470, just under the Nasdaq 100’s 1480 close. Thursday is a potential cycle turn date. The Nasdaq and Nasdaq 100 (fifth and sixth charts) both broke down out of bullish falling wedges today, making that Nasdaq 100 the critical support here. 1850-1860 on the Nasdaq is now first resistance. The S&P 500 (seventh chart) held critical 1155 support, and 1180 is the resistance level to beat. The Dow (eighth chart) broke 10,200 support, which is now resistance. First support is 10,120, and then 9950-10,000. Finally, one more mention of the similarity to the 1946 panic that we’ve been following: the bulk of the down move would come in the next few trading days if that pattern continues. Something to keep an eye on, given the market’s reaction to the Fed today.

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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