Stocks Plummet On Home Depot Warning, Mideast Violence

Stocks plummeted Thursday on an earnings warning from Home Depot, a terrorist attack on a U.S. destroyer and an Israeli attack near Palestinian headquarters. After the bell, Juniper Networks blew away earnings estimates, while DoubleClick matched estimates with its first profitable quarter, but guided forward estimates lower.

The ISDEX dropped 34 to 595, and the Nasdaq fell 93 to 3073, its lowest close this year. The S&P 500 lost 34 to 1329, and the Dow plummeted 379 to 10,034. Volume declined slightly to 1.37 billion shares on the NYSE and 2.1 billion on the Nasdaq. Decliners led by 21 to 7 on the NYSE and 29 to 11 on the Nasdaq. The Producer Price Index for September will be reported in the morning; analysts expect gains of 0.5% in the PPI and 0.1% in the core. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our after hours trading site.

Juniper , off 7 to 199 in regular trading, rose to 202 after hours after reporting earnings of 17 cents a share, almost double estimates. DoubleClick dropped to 14 after hours after losing 3 11/16 to 17 1/2 during the day. Three-cent earnings matched estimates, but revenues came in a little light, and the company guided forward estimates lower.

During the day, Yahoo dropped another 8 3/4 to 56 5/8. The company beat estimates Tuesday, but warned that it expects the difficult Internet advertising environment to continue for the next several quarters, and that marketing costs will likely rise faster than revenue. eBay lost 2 to 51, and Amazon.com dropped 2 3/4 to 25 a day after closing at a new 52-week low. Amazon’s next strong support is 20.

Corning rose 1 1/8 to 84 1/4 on a positive earnings pre-announcement. Bellwether Cisco fell 1 7/16 to 49 3/4, closing below the important $50 level. Sonus Networks , which beat earnings after the bell Wednesday, dropped 3 1/8 to 38 5/8, and Redback Networks , which also beat earnings, lost 10 9/16 to 102. Sycamore gained 4 5/16 to 77 on a deal with BellSouth.

Stamps.com lost 1/4 to 2 11/16 on the resignation of chairman and CEO John Payne. For more on the stock, which is trading for less than cash on hand, click here.

NetIQ soared 19 3/4 to 69 3/4 on a deal with Microsoft .

WebMD lost 1 7/16 to 8 1/4 on the resignations of director Jim Clark and co-CEO Jeffrey Arnold.

Sagent Technology plummeted 2 13/16 to 2 13/16 on an earnings warning.

Inktomi slipped 3 3/16 to 75 1/8 despite a JP Morgan Buy rating, a day after breaking a descending triangle just under 90. The size of that pattern is about 70 points; it’s not likely that Inktomi is going to 20, but it could have significant downside ahead, perhaps to support at 50.

Some technical comments on the market: Note: We are now 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

The Nasdaq broke support on a line with its 1999 peak. A break below the previous 3042 bottom would likely lead to a final bo

ttom somewhere in the 2300-2900 range, 1999’s large trading range. To the upside, we want to see the Nasdaq get back above 3250, a small downtrend within a downtrend, then 3500-3521, its previous bottom and main downtrend line. If the index can recover anywhere above 3000, it could form a rectangle between 3000 and 4300. Also, there is a gap at 2900 that could be a downside lure here.

The S&P 500 broke its 1994 logarithmic trendline at about 1350, a very important level. The break of that line, which was briefly pierced in the 1998 sell-off, could carry the index as low as 1200. Hopefully, the index can recover back above that line quickly, as it did in 1998. The index also took out 1340, its April bottom. The S&P could find some support around 1300. To the upside, first resistance is at 1340, then 1350 and 1380.

The ISDEX again broke support at 650, the lower end of a 200-point trading range, and proceeded to take out 600. Next up is the May low of 560. First resistance is the ISDEX’s downtrend line at about 675. The Dow broke its April trendline at about 10,400 a day after piercing it, and also broke critical support at 10,200 today, the April low. The index could be headed as low as 9,500-9,700.

So how much lower could the market be headed? Since bear markets tend to end in October, hopefully the answer is soon, maybe as soon as tomorrow or Monday. But since the S&P broke its all-important 1994 logarithmic trendline, we should at least take a look at where the 1994 linear trendlines are. Those numbers are at about 9500 on the Dow, 1200 on the S&P, and 2000 on the Nasdaq. Also in those charts, look at the 1984 trendline, the main trendline of this bull market before 1995; we could drop a long way and still be in a primary bull trend. Also, we added the 1998 trendline to the Nasdaq to show how “vertical” its advance had gotten. And finally, we should point out that the break of the Dow diamond pattern that we’ve been covering could give that index downside to 8600 or lower. Again, all just speculation, with a hope for a quick ending to the sell-off. The indexes are as technically oversold as they have been at any time in the last three years, but that doesn’t mean they can’t keep getting more oversold.

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