Technology and Internet stocks bounced back from a steep opening plunge on Friday after former Fed official Alice Rivlin said she expects a half-point rate cut from the Fed next week.
The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 1 to 426 after trading as low as 409, and the Nasdaq finished up 26 to 2781 after trading as low as 2686. The S&P 500 slipped 2 to 1354, and the Dow lost 66 to 10,662. Volume declined to 1.1 billion shares on the NYSE, but rose to 2.3 billion on the Nasdaq. Decliners led 14 to 13 on the NYSE, and by a handful of issues on the Nasdaq. The Federal Reserve meets next Tuesday and Wednesday. 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.
PMC Sierra plunged 22 to 74 after guiding first-quarter sales sharply lower. The warning weighed on Cisco
, down 15/16 to 38 3/8, a big PMCS customer. Broadcom
rose 5 15/16 to 109 15/16 after trading as low as 95, but is still off 30 points in two days.
JDS Uniphase , up 4 3/8 to 58 9/16, beat estimates but lowered forward guidance. Qualcomm
, up 7 1/4 to 81 3/16, also topped estimates.
Art Technology soared 9 7/8 to 34 7/8 after beating estimates and raising forward guidance. But competitor BroadVision
fell 13/16 to 14 1/16 after missing estimates. E.piphany
, up 3 1/4 to 39 1/2, also beat estimates.
Looksmart , off 9/64 to 3 13/32, missed its numbers. Sapient
, down 1/4 to 16 3/8, met estimates. Excite@Home
, down 1 1/16 to 6 15/32, met estimates but warned about future results.
SonicWall , up 2 1/8 to 20, beat estimates, but better than expected numbers didn’t help Blue Martini
, which slipped 1 7/16 to 10 1/16. Corvis
, down 3 1/16 to 20 7/16, met estimates.
Homestore.com surged 3 3/16 to 32 3/8 after beating estimates and raising forward guidance. eToys
, down 1/16 to 7/32, missed estimates. Egghead.com
slipped 1/32 to 1 3/16 after warning of lower than expected revenues.
Packeteer , up 4 1/2 to 17 1/2, met estimates with 2-cent earnings. Cobalt
, off 1 to 4, issued an earnings warning. Neoforma
rose 3/16 to 1 11/16 despite issuing an earnings warning.
Netegrity surged 9 3/8 to 57 9/16 after beating estimates. Globix
slipped 3/8 to 6 9/16 despite topping estimates. Speechworx
fell 3 15/16 to 38 despite beating estimates. BackWeb
slipped 3/8 to 6 9/16 despite topping estimates. IntraNet Solutions
tacked on 1 3/8 to 44 3/4 after beating estimates.
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The Nasdaq 100 bounced off its broken September downtrend line this morning (first chart), a good sign for the bulls. The S&P 100 is also comfortably above its downtrend line (second chart). The ability to weather a warning from a high-flyer like PMC Sierra is a big plus.
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The Nasdaq once again began to fill its gap at 2618.55, and once again stopped, the decline halted by the index’s downtrend line (the corresponding gap in the Nasdaq 100 is 2470.72). While we’d like to see that downside lure removed, the index’s strength at that level is a plus, since those gaps occurred on a breakout and the broken downtrend lines held. The maximum downside expected is about 2500, the lower channel boundary (black line) in that chart.
The ISDEX also refuses to fill its gap at 388; that gap also occurred on a downtrend line breakout. Maximum downside expected on that index is 380-388, where it broke out recently.
The S&P 500 broke down out of its smaller rising channel (the gray lines) today and ended the day below that line, signaling potential weakness in the broader market. Maximum expected downside would be that lower black channel line at 1310.
The Dow is once again the weak link, dangerous sector rotation that we’re getting tired of warning about. Hopefully another rate cut next week will bring the indexes into alignment. We expect that broken downtrend line at about 10,550 to hold, if the index gets that low, and 10,500 has also been strong support. Critical support is 10,300 on the Dow, and a close above 11,007 would be bullish, particularly if the Dow Transports can get back above 3000 and stay there. The Trannies closed today at 2956.
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