Stocks sold off across the board Thursday on earnings warnings from Gateway and Altera.
The ISDEXfell 28 to 384, and the Nasdaq lost 154 to 2552, both new 52-week lows. The S&P 500 dropped 33 to 1308, and the Dow lost 208 to 10,420. Volume surged to 592 million shares on the NYSE and 1.1 billion on the Nasdaq. Decliners led by 17 to 8 on the NYSE and 28 to 8 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.
Aribadropped 4 15/16 to 52 15/16, just above 49 support, after co-founder and CFO Edward Kinsey resigned. He was replaced by Robert Calderoni from adhesive firm Avery Dennison. Commerce Onedropped 4 3/8 to 26 5/8, breaking 29 support, and i2fell 5 7/16 to 85.
Communications chip companies sold off on the warning from Altera, which lost 3 1/16 to 22 7/8. Broadcomdeclined 4 7/8 to 90 1/8, PMC-Sierrafell 13 1/2 to 90, and Vitessedeclined 6 15/16 to 42 1/4.
Juniper Networksbucked the trend, rising 4 1/2 to 120 after announcing an alliance with Ericssonto develop mobile Internet routing products.
Tut Systemsdropped 3 7/16 to 7 1/4 on an earnings warning. Stratos Lightwaveslipped 1 3/4 to 15 despite beating earnings estimates.
Brocade Communications’ better-than-expected earnings helped storage stocks. Brocadesurged 10 5/16 to 164 1/16, EMCslipped 2 7/8 to 70 5/16, Veritasrose 1 13/16 to 89 13/16, and Emulexlost 1 to 109 1/2.
NorthPoint Communicationsplunged 1 17/32 to 15/32 after Verizonterminated its merger agreement with the firm, citing a deterioration in fundamentals.
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: http://www.afterhourstrading.com/column.html
The Philadelphia Semiconductor Index continued its descent toward 400 two days after closing below the lower boundary (600) of a 200-point descending triangle by more than the required 2%. However, we do not expect the SOX to hit that number immediately, given that the apex of the pattern is still some time away. A close above 625 would negate the SOX’s breakdown.
The Nasdaq reached our downside target of 2530 today, duplicating its 41% descent from 5132-3026 from its second peak at 4289. Could be a good point for a rally, but we’re so close to the 1990 logarithmic trendline at 2300-2400 that we’d like to see that line hit to feel comfortable here.
The Nasdaq 100 broke through the lower boundary of its falling wedge, a negative sign.
The ISDEX continues to trade below its broken support line, leading us to believe that it may still have some downside ahead. Based on the size of the broken pattern, the ISDEX could have downside to 320-370. The index has strong support at 375-400. A move above 480 would be a real positive for Net stocks.
The S&P 500 negated its falling wedge breakout today and took out that lower support line at about
1315, giving the index downside potential all the way to 1200. However, it so far has held its previous low of 1305.
The Dow negated its 400-point descending triangle yesterday, a positive sign, but is now testing the lower boundary of that pattern at 1380. A close below 1380 would set up a retest of 10,000.
Special report: For a free introduction to technical chart patterns and an overview of this year’s action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.