NASDAQ Technical Picture - Profit Taking on Higher Volume

The Nasdaq was down 0.64% to close at 2729 on slightly higher volume. At this point we can only say that we are retesting the base from Monday's breakout move. However, the NDX 100 shows a slightly more negative picture due to the completion of a bearish evening star reversal pattern. Today's tech weakness was led by the SOX which was down 2.1%. Most major tech sectors ended the session in the red except internet which was unchanged and biotech up 0.14%.

Today's movement came from lower than avg volume (1884, vs. 2161 avg), with decliners outpacing advancers (1144/1815) . However, new highs outpaced new lows (147/62).

Several companies have lowered guidance ahead of earnings, most notably NTRI which is off by $11.00+ or 22.6% in AH trade.

Economic Calendar: Initial claims in pre-market (consensus 310) and Factory orders at 10:00 (consensus 2.8%)

In reviewing my watch list, I noticed several failed BO attempts, as well as, a few bearish engulfing bars and bearish evening star patterns. Profit taking at these levels is healthy given the level of the extension since the FOMC decreased interest rates. Failed patterns are prime opportunities for shorting because failures often result in fast moves in the opposite direction.

Companies moving in after hours trading in reaction to earnings: Trading Up: TISI +6.7%; BLUD +2.7%... Trading Down: SMOD -4.6%...

Trading Up: ITWO +6.2% (lowers Q3 EPS guidance to $0.37-0.40 vs $0.49 Reuters consensus); GNK +3.0% (announces sale of Panamax Vessel; expects to realize a net gain of ~$26 mln in 1Q08); ROCK +1.6% (to sell the assets and cease the operations of its Hubbell Steel subsidiary); VNUS +1.3% (lowers Q3 EPS guidance to $0.37-0.40 vs $0.49 Reuters consensus); NPSP +1.2% (announces an increase in tender offer price for its 3.0% convertible notes due 2008 and extends expiration date until October 17, 2007)...

Trading Down: NTRI -22.6% (lowers Q3 guidance); RNIN -20.9% (lowers Y07 rev guidance); WTSLA -15.0% (lowers Q3 guidance); ISLN -14.4% (lowers Q3 EPS and rev guidance); LWAY -8.9% (reports Q3 revs); BMS -8.7% (lowers Q3 EPS guidance to $0.37-0.40 vs $0.49 Reuters consensus); TOA -7.4% (withdraws 2007 and 2008 guidance due to worsening market conditions); TRMS -2.6% (Trimeris and Roche withdraw application to market Biojector 2000 device for use with FUZEON); MOH -1.1% (announces $150 mln offering of convertible senior notes).

RIMM reports earnings after hours tomorrow. Consensus is looking for EPS of $0.49 on revenues of $1,370