Waiting For Intel

Tech stocks pulled back Tuesday morning, as traders awaited Intel’s earnings report after the bell.

The ISDEX http://www.wsrn.com/apps/ISDEX/ slipped 3 to 384, and the Nasdaq lost 42 to 2583. The S&P 500 fell 3 to 1314, and the Dow added 8 to 10,533. Volume declined to 520 million shares on the NYSE, and 923 million on the Nasdaq. Decliners led by a few issues on the NYSE, but advancers led 19 to 16 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.

Intel , down 7/8 to 31 1/4, and Juniper , off 4 3/8 to 127 1/8, are two of the companies scheduled to report earnings tonight, as earnings season swings into high gear. Applied Micro slipped 1/16 to 71 9/16, despite positive comments by Robertson Stephens ahead of the company’s earnings report tonight.

Breakaway Solutions soared 1 3/8 to 2 5/8 after securing additional financing from major shareholder Internet Capital Group , up 7/32 to 5 1/8.

Corvis rose 1 1/16 to 24 1/16 after the successful implementation of all-optical networking by Williams Communications led to an extension of the companies’ $200 million agreement by an additional $100 million.

Aether Systems climbed 2 1/8 to 40 3/16 on a Banc of America Strong Buy rating.

Intraware surged 7/8 to 3 3/16 after reporting better-than-expected results late Friday and guiding estimates higher.

C-bridge Internet rose 5/32 to 4 5/32 after announcing 14% layoffs, or 100 employees.

I-many soared 2 3/8 to 14 1/4 on an SG Cowen Strong Buy rating and $21 price target.

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 is pulling back on lower volume for the second straight day, a good sign that sellers don’t have the conviction they once had. The index formed a doji on Friday (trading higher, lower and finishing close to unchanged), an indecision day that could signal a reversal. The Nasdaq and Nasdaq 100 continue to trade just under major resistance. The Nasdaq squeezed above its September downtrend line (first chart) at 2650 on Friday, only to pull back within it. A close above 2700 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 2375, 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 potential 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 on Friday, giving the index a little more resistance than it could handle. A close of 2650 on the Nasdaq 100 could carry the Nasdaq indexes to 3000.

The ISDEX continues to hold

above its 380-385 breakout level, a good sign for Net stocks, but it needs to close above 400. It turned back Friday at 398.

The S&P 500 appears to be correcting out of a week-old uptrend here. We would expect 1280 support to hold, if the index even gets that low. Critical resistance is the index’s September downtrend line at about 1440.

The Dow continues to hold support at the neckline (10,500) of an inverse head-and-shoulders bottom. However, the index continues to meet resistance at 10,600, the level where the Fed cut interest rates, trapping the Dow in a very narrow trading range. 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.

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