Nets, Techs Fall on Profit Concerns

Shares of Internet and technology companies fell on Monday, as an earnings warning from Citrix Systems outweighed a positive preannouncement from Corning Inc.

The Nasdaq fell 84 to 3790 and the ISDEX dropped 32 to 735. The Dow declined 22
and the S&P 500 fell 6 points. Volume was 338 million shares on the Big Board, where the advance-decline line was even. Nasdaq volume was 588 million, with decliners leading 23 to 13. Traders awaited Wednesday’s Consumer Price Index, which is expected to show a 0.2% increase.

Shares of Caldera Systems soared 4 to 15 3/4 on news that IBM will offer some Thinkpad laptop computers with Caldera’s OpenLinux 2.4 operating systems. rose 2 5/16 to 10 3/4, down from an intraday high of 11 5/8, after announcing it had agreed to buy Zanova Inc., a provider of business Internet software, for $21 million in stock.

Shares of iBasis soared 8 3/16 to 33 9/16 after announcing that China Mobile Telecommunications has chosen The iBasis Network for global Internet telephony.

eToys fell 7/32 to 6 11/32 after announcing that it will buy certain assets of eParties, a unit of eCompanies, for $1.6 million in stock.

Shares of leading Internet stocks headed lower.

eBay fell 5 1/16 to 68 1/8. The online auction site has come under fire recently for bogus bids and competitive business practices. Shares of Yahoo! fell 4 15/16 to 138 1/4.

Shares of America Online continued to show weakness, falling 1 11/16 to 52 7/8 on a SoundView downgrade from Strong Buy to Buy, on concern about Time Warner fundamentals. fell 2 15/16 to 49 1/4.

Shares of Ariba fell 4 15/64 57 7/16. The stock failed to break out of a wide two-month trading range, ranging from 49 to 83. Shares of Commerce One fell 2 1/16 to 51 3/4 and CMGI fell 3 7/8 to 57 3/16.

DoubleClick fell 5 3/8 to 44 11/16.

Shares of MicroStrategy finally cooled off, falling 13 7/8 to 48 3/8. The company is rumored to be close to securing a round of $100 million in financing. However, Merrill Lynch said it sees no change in the company’s fundamentals or financing situation.

Some Internet infrastructure plays were strong on the Corning news. Shares of JDS Uniphase rose 3 3/8 to 113 15/16 and shares of Juniper Networks climbed 4 9/16 to 228 5/8. Shares of ZipLink soared 2 3/4 to 7 7/8.

Ventro rose 1 7/16 to 34, extending Friday’s gains. The company, which operates five vertical marketplaces, is expected to announce a sixth soon.

Some technical comments on the market: The Nasdaq’s continued failure at 3900 is starting to look like a negative. An awful lot of money went into the index in the 3800-4100 range. Those traders who were sitting on huge losses now have a chance to get out at even or close to even, which is the source of this monumental struggle. A convincing break of either 3900 or 3725 will tell us which side is likely to win this battle. If we can clear 3900, our next resistance level is 3950-4000 (3982), and if we clear that, a 50% Fibonacci retracement to 4100-4200 is likely. A break of 3725 would likely take us back to 3600. One sign of potential trouble is that we are a few days from a bearish moving average crossover on the Nasdaq. The Dow still looks troubled after its break below 10,700, and a further

break below 10,650 Friday confirmed the downtrend. The next important level is 10,550; a break of that would tip the equilibrium to the downside. The Dow continues to fail at its 50- and 200-day moving averages and appears to be developing a bearish descending triangle. And the Dow and other broader indices are still developing larger bearish patterns in the weekly charts that need to be broken to resume a new bull phase: “diamond” patterns in the Dow and S&P 500, and either a head and shoulders or diamond in the S&P 100. The S&P 500’s upper boundary is at 1480, where it turned back recently; a decisive break of that level could be the first sign that we are headed higher.

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