Weak Dollar Sinks Stocks

A falling U.S. dollar overshadowed a positive earnings report from Applied Materials on Wednesday, sending stocks sprawling.

The ISDEX http://www.wsrn.com/apps/ISDEX/ dropped 6 to 181, and the Nasdaq fell 45 to 1918. The S&P 500 declined 8 to 1178, and the Dow lost 66 to 10,345. Volume rose to 1 billion shares on the NYSE, and 1.4 billion on the Nasdaq. Surprisingly, advancers led 16 to 14 on the NYSE, but decliners led 21 to 15 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.

After the bell, Brocade slipped after matching estimates.

During the day, industrial production, business inventories and capacity utilization showed that manufacturing remains mired in recession.

Applied Materials climbed .09 to 43.74 on better-than-expected results, but BEA Systems fell 1.67 to 16.93 on its earnings report. NVIDIA , up .25 to 86.10, and Network Appliance , up .44 to 13.20, climbed on their results.

Vitesse fell 1.41 to 17.83 on a negative SEC filing, but analysts said the prediction of a sequential revenue decline was old news.

eBay barely held critical 60 support, falling 1.37 to close exactly at 60.

GoAmerica rose .28 to 1.63 on an alliance with AOL .

Ciena fell 1.28 to 28.12 ahead of its earnings report tomorrow morning. Dell , off 1.17 to 25.40, reports earnings tomorrow night.

Check Point and Check Free dropped on analyst downgrades.

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

You really only need to look at one chart tonight: A close-only plot, ignoring all the intraday noise, of the Nasdaq (first chart). Pretty convincing breakdown, huh? That breakdown appears to target the 1840 area on the Nasdaq, and the 1960 level should now be resistance, assuming the index can clear 1934-1941 first. If the bulls are going to make a stand here, the 1870-1890 level would be the place (second chart), that lower trendline and the 62% retracement from the April 4 low to the May 22 top. Notice how the Nasdaq is developing a steep downtrend in that second chart. The Dow (third chart) looks like it just plain wants to roll over, and the NYSE 10-day TRIN reached its highest reading since right before the Dow’s plunge to the March lows. There is some real selling pressure out there. There are only two levels that matter on the Dow: 10,200 to the downside, and 10,500 to the upside. The S&P 500 (fourth chart) is clinging to a steep downtrend line just above critical 1165-1175 support. 1200 is the level to beat. The good news is that there was finally a little spike in fear today (about time), which could be a hint of a short-term bottom in the next day or two. Friday-Monday is a cycle turn window.

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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