Stocks Bounce After S&P Joins Bear Market

Stocks finally bounced on Thursday, but not before the 10-month bear market in technology and Internet stocks spread to the S&P 500, which fell more than 20% off its high for the first time since 1990.

The ISDEX lost 5 to 300, but not before it hit a new low of 285, and the Nasdaq was unchanged at 2268 after falling as low as 2185, its lowest level since December 1998. The S&P 500 lost 4 to 1251, falling 20.9% below its intraday high of 1553 at its low of 1228. The Dow was off 27 to 10,497 after trading down 150 points. Volume surged to 620 million shares on the NYSE, and 1.17 billion on the Nasdaq. Decliners led 18 to 9 on the NYSE, and 24 to 10 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

Brocade , off 3 3/4 to 41, sent storage stocks plunging after topping estimates but lowering forward guidance. EMC lost 3.30 to 39.65, but well off its low of 34, and Network Appliance lost 1 3/16 to 33 1/8.

Portal Software plunged 2 7/32 to 7 17/32 after beating estimates by a penny with 4-cent earnings, but issuing an earnings warning.

Check Point Software , off 8 5/16 to 75 7/8, was pressured by rumors of a pending earnings from firewall software partner Nokia . Nokia said its quarter remains on track, bringing Check Point off its low of 68 1/4.

Internet Capital added 3/16 to 3 5/8 after reporting a loss of 70 cents a share. Evoke , up 3/8 to 2 1/32, topped estimates and raised forward guidance. StarMedia , down 13/32 to 3 17/32, matched estimates with a 49-cent loss. tacked on 1/16 to 12 after hitting anew 52 week low of 11 3/8. Lehman Brothers and Merrill Lynch have made negative comments on the company the last two days.

Sun Microsystems rose 1 5/8 to 21 1/4 ahead of the company’s analyst meeting after the close.

Cisco rose 1 5/16 to 26 7/16 after holding 25 support for the second straight day.

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 found support this morning along its early 1999 lows, and a good thing too, because the next strong support would be 2028, the July 1998 top (see first chart for both support levels). The Nasdaq may finally be starting a bounce here. To the upside, first resistance is 2300, then 2350, and then 2388, the 1990 logarithmic trendline (second chart), which the index absolutely must get back above to be restored to any sort of technical health. Above that, the index needs to get back above its September downtrend line (third chart) at about 2450; note other possible support and resistance levels off that secondary peak. The good news is that the previous four times the Nasdaq hit a new two-year low, it was 1% higher three weeks later and 30% higher a year later. Here’s hoping the techs hold true to form.

The S&P 500 also found suppo

rt around its early 1999 lows at 1228 this morning; next support is the July 1998 peak of 1190 (both supports in the first chart). To the upside, the S&P needs to get back above its September downtrend line at about 1290 (second chart).

The Dow found support just above the important 10,300 level. First resistance on the index is 10,525, followed by 10,650. Critical resistance is 11,000, but given a breakdown in the Dow Transports, which fell to 2905 today before rebounding to 2933, a Dow Theory bull market confirmation does not appear likely soon. The Transports must get back above 3000 and stay there, and the Dow must close above 11,007 to get an all clear signal under Dow Theory.

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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