Techs Take A Break

The Nasdaq pulled back from its strong recent gains on Friday, while blue chip issues continued to lag.

The ISDEX http://www.wsrn.com/apps/ISDEX/ added 8 to 388, and the Nasdaq slipped 14 to 2626. The S&P 500 lost 8 to 1318, and the Dow fell 84 to 10,525. Volume declined to 1.2 billion shares on the NYSE, and 2.5 billion on the Nasdaq. Advancers led by 14 to 13 on the NYSE, and 23 to 14 on the Nasdaq. The Producer Price Index and retail sales came in stronger than expected, fueling fears that the Fed may not cut interest rates as much as expected. 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.

Ariba plunged 8 1/2 to 34 7/8. The company blew away estimates with earnings of 5 cents a share, 3 cents better than expected, and raised forward guidance. But analysts downgraded the stock on concern about slowing sequential revenue growth and a doubling in receivables. i2 slipped 2 1/8 to 48 5/8, and Commerce One fell 3 3/16 to 21 1/2.

DoubleClick surged 3 1/2 to 14 3/4 after beating reduced estimates but guiding first quarter results lower. Full-year projections were above analysts’ expectations.

Looksmart slipped 19/32 to 2 1/2 after warning of lower than expected results.

Earthlink added 1/32 to 8. The company’s high-speed Internet services will benefit from the merger of America Online and Time Warner approved by the FCC last night.

Digital Island slipped 3/32 to 4 21/32 after announcing the departure of President Leo Spiegel, who is headed for Mission Ventures, a venture capital firm.

Broadcom , up 7 9/16 to 123 3/8, continued to rise despite disappointing earnings news from major customers Cisco and Motorola .

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 traded higher, lower and finished close to unchanged today, forming a doji, or indecision day that could signal a reversal. The Nasdaq and Nasdaq 100 hit about all the resistance they could handle this morning. The Nasdaq squeezed above its September downtrend line (first chart) at 2660, only to pull back within it. A close of 2713, breaking that line by 2%, would be bullish. Also, the Nasdaq reached the upper trendline of a rising channel (second chart). The lower boundary of that channel is now at about 2350, and would be the maximum downside expected on any pullback. The index set a higher high on this move to complete a cycle of a higher high and higher low, but the S&P and Dow did not follow, a negative. As we’ve said before, healthy markets move in sync.

The Nasdaq 100 may be forming an inverted head and shoulders bottom. But the neckline of that pattern and the index’s September downtrend line both met at about 2600 today, giving the index a little more resistance than it could handle. A close of 2650 could carry the Nasdaq indexes to 3000.

The ISDEX took out criti

cal resistance at 385, but it needs to close above 400. It turned back today at 398.

The S&P 500 came within a few points of its September downtrend line at about 1440, but again turned back. The bulls don’t seem to be quite ready to regain control of the market.

The Dow continues to meet resistance at 10,600, the level where the Fed cut interest rates. Not a good sign for the overall market. The index continues to hold support at the neckline (10,500) of an inverse head-and-shoulders bottom, but efforts to turn up have been met with selling. Critical support on the Dow is 10,300, while a close above 11,007 would confirm a new bull market 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.

News Around the Web