Nets, Techs Lag As Blue Chips Gain

Internet and technology stocks gave back some of Monday’s gains on Tuesday. But blue chip issues rose despite a lackluster earnings report from Dow component Procter & Gamble.

The ISDEX slipped 12 to 704, and the Nasdaq declined 32 to 3734. The S&P 500 added 5 to 1436, and the Dow rose 47 to 10,569. Volume rose to 395 million on the NYSE, but declined to 575 million on the Nasdaq. Advancers led by 14 to 10 on the NYSE, but decliners led 20 to 15 on the Nasdaq. The purchasing manager’s survey for July came in unchanged at 51.8, ending a four-month decline, and holding above the important level of 50 that signals economic expansion. But the prices paid component came in higher than expected, raising mild inflation concerns. The big economic report for the week is Friday’s July employment data. For earnings reports, visit our earnings calendar and reported earnings.

S1 Corp. lost more than 25%, falling 7 1/8 to 18 5/16. The company released earnings around noon Eastern Time that missed analysts’ estimates.

Ariba slipped 2 3/16 to 113 3/4 despite news of an alliance with Lucent . Technical note: Ariba, a leader in the ISDEX’s recent gains, barely maintained its uptrend during last week’s selling, piercing it on an intraday basis. Competitor Commerce One , which experienced a failed breakout recently, is sitting right on its uptrend line at 41. One stock that did break its uptrend, Vignette , continued to show weakness, slipping another 1 3/4 to 32 1/8.

Red Hat gained 3/4 to 19 1/2 on news of an alliance with Ericsson. gained 1 15/16 to 25 9/16 on news of $190 million in investments from Liberty Media and Paul Allen’s Vulcan Ventures. Technical note: The stock appeared to break down out of a descending triangle at 32 last week, and could have further downside ahead.

Stocks that released earnings after the bell Monday met with mixed results. fell 13/16 to 4 5/16 after missing estimates by 9 cents with a 27-cent loss. Several brokerage firms downgraded the stock.

Expedia blew away estimates with a fourth-quarter loss of 30 cents a share, 17 cents better than estimates. But the stock slipped 1/8 after to 17 after trading as high as 19 7/8. , parent of this Web site, beat estimates by 3 cents with second-quarter earnings of 3 cents a share. The stock rose 11/16 to 19 11/16.

Radware beat estimates by 3 cents with 7-cent earnings, but the stock slipped 1 13/16 to 30 1/4. Digex beat estimates by 2 cents with a 54-cent loss, and a bullish conference call lifted the stock by 7 7/16 to 70 1/2. Liquid Audio beat estimates by a nickel with a 35-cent loss, but slipped 1 13/16 to 7 7/16. EDGAR Online missed estimates by a penny with a second-quarter loss of 15 cents, but the stock gained 7/16 to 3 11/16. soared 1 1/32 to 5 31/32 on an 83-cent loss, 14 cents ahead of estimates, and news of $63 million in financing.

Lionbridge missed estimates by 16 cents with a 33-cent loss, but the stock rose 3/4 to 8 1/2. Genuity beat estimates by 3 cents with a 23-cent loss, and the stock gained 1/4 to 8 3/8.

Juno Online beat estimates by 12 cents with a $1.11 loss. The stock gained 3/8 to 9 7/16. For more on Juno’s broadband access deal with Time Warner announced yesterday, click here. slid 3/32 to 1 1/16 on news that m

erger talks with closely-held MilleniumHealth had ended.

Some technical comments on the market: Not much of a rally so far, which leads us to believe we may just be consolidating before a further move down. The Nasdaq has run into resistance at the very bottom of its large consolidation from June and July; an awful lot of money that went into the market the last months is now under water, giving the index a lot of overhead resistance here. And given the Nasdaq’s break of a rising wedge last week, the index has downside potential back to 3042 if it is unable to mount a more impressive advance. Critical support is 3550-3585. To the upside, resistance began around 3750-3766 yesterday. Next up the 3820-3830 level, and then again at the 200-day moving average at 3875. We should note that we see no bottom here equivalent to the inverse head-and-shoulders that the Nasdaq formed in the 60-minute charts at the start of the rally that began in May. The ISDEX is back above the important 700 level, but not by much. To the upside, the ISDEX is likely to run into resistance at the lower boundary of the rising wedge it broke on Friday; that boundary is now around 730. The broken wedge gives the ISDEX potential to return to 560, its May low. A closing break of the index’s recent intraday low of 692 would be a warning sign; we closed right at 693 on Friday. To the upside, above 730 is 790 resistance. Above that, the ISDEX turned back recently at 840, just below its 50% retracement level of 845. The S&P 500 also broke a bearish rising wedge last week, and fell as low as 1414 on Friday. Critical support is 1390, the index’s October 1998 uptrend line. A break of that trendline could carry the index to 1170 or lower, so we do not want to violate that line. To the upside, the S&P is facing resistance here, in the 1435-1440 range, and then again in the 1450-1460 range. The Dow turned back Friday after testing the lower boundary of its bearish diamond pattern (10,464, but we’ll continue to use 10,200-10,300 because of strong support in that range and the requirement of a 3% break of a major pattern). A break of that line could carry the Dow as low as 8,500. The upper boundary of the Dow’s bearish diamond pattern is 11,000. Near-term resistance for the Dow is likely in the 10,600-10,675 area.

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