Priceline Plummets On Earnings Warning

Pricline.com plummeted on an earnings warning Wednesday morning. Internet stocks traded lower on the news, but the broader traded modestly higher.

The ISDEX fell 12 to 766. The Nasdaq gained 23 to 3712, the S&P 500 added 5 to 1432, and the Dow climbed 17 to 10,648. Volume rose to 525 million shares on the NYSE and 870 million on the Nasdaq. Advancers led 14 to 10 on the NYSE, but decliners led 19 to 16 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.

Priceline fell 7 5/8 to 11 after warning that third-quarter revenues will be $340-$345 million; analysts expected $360-$380 million. The company cited a shortfall in revenue from the sale of airline tickets. Cheap Tickets fell 1 3/16 to 9 3/8 in sympathy.

Yahoo dropped 8 1/8 to 94 5/16, breaking important support at 99 1/2-99 3/4, the May and August bottoms. eBay lost 4 1/8 to 66 9/16.

Amazon.com fell 2 3/16 to 37 9/16. The Washington Post ran a front-page story accusing the company of using dynamic pricing, charging some users more than others based on ability to pay.

Bellwether Cisco Systems recovered 1 3/4 to 56 15/16 on a better-than-expected loss from 3Com .

TIBCO Software rose 3 13/16 to 88 13/16 after reporting earnings of 7 cents a share, 2 cents above estimates.

VerticalNet gained 3 3/4 to 34 on a Lehman Brothers Buy rating. However, Robinson Humphrey downgraded the stock to Outperform based on an e-mail survey that found a large percentage of clients are undecided about whether to renew.

Commerce One gained 4 1/4 to 79 3/4 on news of an expanded partnership with Microsoft .

GoAmerica gained 5/8 to 8 3/4 on a partnership with Sierra Wireless to provide wireless data and Internet access for the Handspring Visor handheld computer.

ScreamingMedia.com gained 1 1/8 to 9 3/4 on a partnership with BroadVision
.

FreeMarkets slipped 1 1/4 to 69 after trading as high as 74 3/8 on comments from Merrill Lynch that the company could beat revenue estimates by 15-20%.

Some technical comments on the market: Note: We will now be including charts with the technical market commentary; just click on the links in the story below to go to them. If you have trouble accessing the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

Surprisingly, we had one sign of a potential bottom this morning: the put/call ratio spiked up to .95 around 10:30-11 a.m., above the important .90 level. It wasn’t accompanied by a huge spike in the volatility index (VIX), however, but it’s nice to see some fear entering the market. Given that the major indexes all held important support levels this morning, it’s a sign that the bulls could be ready to regain control of this market.

The Nasdaq held support at its October 1998 trendline around 3650. Below that, critical support is the August bottom of 3521; below that, and the market could be headed for trouble. To the upside, resistance can be found about every 50 points starting with 3750, today’s high. The first major Fibonacci test comes at 3859, the 38% retracement level of the 4259-3614 decline. One other sign that at least a short-term bottom cou

ld be established here is that the stochastics have reached very oversold levels on the Nasdaq. None of this means the market still can’t go lower, but if the bulls are going to pull this out, they have a chance here.

The S&P 500 found support at its critical support level at 1420 (the black line. Also in the S&P chart, note the gray line, which is the broken October 1998 trendline; and the broken rising wedge, or a rally with converging boundary lines, that began the decline). 1420, where the S&P turned up last week, is on a line with the March (1340) and April (1361) bottoms. To the upside, major resistance can be found in the 1435-1440 area and then 1460.

The Dow also held critical support, the October 1998 trendline. That line is just under 10,600 now, so a move below last week’s low of 10,575 would be a big negative. To the upside, if the Dow can clear 10,900, the old economy stocks could have room to run.
The ISDEX found support once again in the 750-760 area this morning. Critical support is the May uptrend line at about 725. To the upside, first resistance on the ISDEX is 787-800, and above that, two recent rallies have peaked around the 50% retracement level at 850.

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