Technology and Internet stocks could come under pressure again on Friday morning after Sun Microsystems warned after the close on Thursday.
Stocks finally bounced during the day, 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 http://www.wsrn.com/apps/ISDEX/
lost 10 to 296, a new closing low, and the Nasdaq dropped 23 to 2244 after falling as low as 2185, its lowest level since December 1998. The S&P 500 slipped 2 to 1252, after falling 20.9% below its intraday high of 1553 at its low of 1228. The Dow was unchanged at 10,526 after trading down 150 points. Volume rose to 1.3 billion shares on the NYSE, and 2.4 billion on the Nasdaq. Decliners led 19 to 11 on the NYSE, and 24 to 12 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.
slipped to 19 1/2 after hours after warning that revenues will come in at 7-9 cents a share, much less than the 15 cents analysts expect. But the company also announced a $1.5 billion stock buyback program. Nasdaq futures traded down 30 points after hours.
During the day, Brocade
, off 2 3/4 to 41 15/16, sent storage stocks plunging after topping estimates but lowering forward guidance. EMC
lost 2.60 to 40.35, but well off its low of 34, and Network Appliance
lost 3/8 to 33 7/8.
plunged 2 3/4 to 7 after beating estimates by a penny with 4-cent earnings, but issuing an earnings warning.
Check Point Software
, off 10 3/16 to 74, 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. A warning from the NYSE stock with the ticker symbol “CKP” was also credited with the Check Point sell-off.
added 1/16 to 3 1/2 after reporting a loss of 70 cents a share. Evoke
, up 7/32 to 1 7/8, topped estimates and raised forward guidance. StarMedia
, down 7/16 to 3 1/2, matched estimates with a 49-cent loss.
was unchanged at 11 15/16 after hitting a new 52 week low of 11 3/8. Lehman Brothers and Merrill Lynch have made negative comments on the company the last two days.
rose 1 1/2 to 26 5/8 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: http://www.afterhourstrading.com/column.html
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 is overdue for a bounce, but today’s rebound was weak, and given the technical damage to the index, we expect any rally at this point to be a weak one, and we wouldn’t be surprised to see the 2000 level reached soon. 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. We suspect the index ma
y not be able to clear that 2388 level, barring some aggressive Fed rate cutting. 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 support 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, and formed a perfect doji, trading lower, higher and ending unchanged. Given the imperfect doji in the S&P 500 and the weakness in the Nasdaq, that could mean that the blue chips may outperform in the near term. First resistance on the index is 10,525, where the Dow closed, followed by 10,650. Critical resistance is 11,000, but given a breakdown in the Dow Transports, which fell to 2900 today before rebounding to 2918, 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 http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.