Techs Slip On Earnings Worries

Rate cuts by the European Central Bank and the Bank of England gave stocks an early boost on Thursday, but the Nasdaq gave back all of its gains and then some on earnings concerns.

The ISDEX http://www.wsrn.com/apps/ISDEX/ lost 4 to 261, and the Nasdaq fell 27 to 2128. The S&P 500 was unchanged at 1255, and the Dow gained 43 to 10,910. Volume declined to 1.06 billion shares on the NYSE, and 1.74 billion on the Nasdaq. Advancers led 18 to 12 on the NYSE, but decliners led 19 to 18 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.

The Producer Price Index and Michigan consumer sentiment could be market-moving reports tomorrow morning.

After the close, IBM raised its own earnings forecast at an analyst meeting, but gave a dark assessment of business in the computer industry that could pressure computer stocks on Friday. Pixar surged after topping estimates.

During the day, Applied Micro , off 1.96 to 24.14, and PMC Sierra , off 3.01 to 37.10, lost ground on word that they were receiving cancellations from Juniper , down 2.67 to 54.70, and Cisco , off .23 to 18.90.

It was a wild day for the chip equipment sector after Morgan Stanley upgraded the sector, but then Goldman Sachs, Merrill Lynch and others said business in the sector is terrible. Novellus and Applied Materials gapped up, only to finish barely positive.

Nortel , off .58 to 15.22, was hit on cash concerns. The company also announced it is exiting the DSL business.

But the day wasn’t all bad news. Earthlink , up .06 to 12.79, and CNET , up 1.03 to 12.70, rose on rumors that they could be a takeover target of Terra Lycos .

Digital Island soared 1.64 to 3.64 on news of a deal with MSN.

Some technical comments on the market: Note: We include 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 formed a bearish engulfing candlestick today, gapping up to start the day and closing negative, and in the process engulfing yesterday’s highs and lows (first chart). Also, the Nasdaq broke down out of a symmetrical triangle in the intraday chart (second chart), and could be headed back to critical 2000 support. First support is 2090. A break of 2233 and then 2252 would be bullish. The good news is that volume was slightly lower than yesterday, and breadth was only slightly negative. The major indexes are all close to giving sell signals in two pretty good trend indicators, MACD and PPO. Here’s a link to the Nasdaq’s chart, which shows how the two indicators have tracked highs and lows in the index over the last year: http://cache.wsrn.com/images/AHT/compx0510ind.gif. Those lines have not crossed to give definitive sell signals yet, and if the trend has changed, those indicators could remain overbought for some time. The S&P 500 (third chart below) is sitting right on support (1255) of a symmetrical triangle; a break of that line would target the 1215 area. 1232-1240 is first support, and 1200 is critical. A break above 1300 would be bullish. The Dow once again is hesitating at the important 11,000 level. A close above 11,035 would be bullish, and support can be found every hundred points from 10,900-10,600.

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.