Look What’s At Critical Support

October 24, 2003
Vincent Mao

Stocks are
lower again this midday.
After yesterday’s pause, the major indices are
selling off once again. Microsoft’s unexpected drop in new software license
sales is the catalyst behind today’s decline. Worse-than-expected revenues or
earnings from the likes of Gateway Computers
(
GTW |
Quote |
Chart |
News |
PowerRating), and Nortel Networks
(
NT |
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PowerRating)
are also adding fuel to today’s sell off. Late yesterday, the world’s biggest
software company reported both earnings and revenues that topped analysts’
estimates. However, a $768 million slide in new software licenses due to recent
virus activity was more than analysts’ estimates. Struggling PC maker Gateway is
off by more than 23% after the company warned of a wider-than-expected
fourth-quarter loss. Telecom equipment maker Nortel Networks
(
NT |
Quote |
Chart |
News |
PowerRating) is lower by
6.53% after the company reported third-quarter results excluding items that
surpassed expectations. However the company did miss its revenue estimates. In
addition Nortel announced that it will restate results from the year 2000.

The major indices are looking
at their first weekly loss after three straight weeks of gains. The trio took
out their respective 50-day moving averages today as well as other key
psychological levels. Triple-digit losses in the Dow has the blue-chip index
under the 9500 level. Its next key support level lies near the 9400 area. The
broader S&P is experiencing similar declines. The S&P also took out the
important 1022 support level. Lastly, the tech heavy Nasdaq is the biggest loser
today. It is also resting on critical support on its weekly trendline.

No economic releases today.

10-year Bonds are +250
at 112 270.

The dollar
is -0.28 at 91.40.

Gold is +4.30 at 389.20.

Crude Oil is -0.25 at
30.02.

Volume is 836,000,000 on
the NYSE, and 1,200,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by 1.73 and down over up
volume by 3.5; Nasdaq declining issues over advancing issues at 2.22, and down
volume over up volume at 5.01.

Top Dow stocks are:

Stocks in the news:

Synaptics
(
SYNA |
Quote |
Chart |
News |
PowerRating) is
higher by nearly 18% after the company reported first-quarter earnings that
doubled from year-ago levels. The notebook computer peripherals maker reported
income excluding charges of 10 cents a share compared to 5 cents a share in the
year-ago quarter. Revenues jumped 33% to $29.6 million. The company is expecting
revenues to grow by 8% to 10% next quarter.

The U.S. Department of Justice
is seeking to block the merger between electronic payment and transactions
giants Concord EFS
(
CE |
Quote |
Chart |
News |
PowerRating) and First Data
(
FDC |
Quote |
Chart |
News |
PowerRating). The DOJ contends that the
merger would reduce competition and will lead to higher prices in general
merchandise. Both companies are planning to fight the decision. Concord is lower
by 4.6% while First Data is lower by 1%.

The world’s biggest software
maker Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) is trading lower by 6.3% despite reporting
better-than-expected first-quarter results. Thanks to an increase in PC demand,
the company reported earnings excluding charges of 30 cents a share or a penny
above expectations. During the same quarter last year, the company earned 19
cents a share. However the shares are lower today as the company’s new license
sale dropped by $768 million compared to estimated declines between $200 to $300
million.

Scientific Atlanta
(
SFA |
Quote |
Chart |
News |
PowerRating)
is lower by 16.5% over concerns of new cable subscriber growth. Yesterday, the
company reported fourth-quarter income of 28 cents a share compared to 7 cents a
share in the year-ago quarter. The results topped estimates by a penny. Sales
rose 27% to $395.6 million. Although the company posted stellar results, Time
Warner Cable, reported that subscriber growth was the slowest in approximately
four years.

Communication firm UTStarcom

(
UTSI |
Quote |
Chart |
News |
PowerRating) is lower by 7.5% despite reporting better-than-expected
earnings. The company reported third-quarter results of 46 cents a share
compared to 27 cents a share in the year-ago quarter. The results topped
estimates by a penny. Revenues rose 44% to $584 million. Looking ahead, the
company raised its full-year revenue outlook to $1.97 billion from $1.82
billion. Earnings are now expected to be $1.62 from $1.60.