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Comments from Chambers has tech off best levels

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Technology stocks have slipped back off their best levels of the session after reports that Cisco Systems' (NASDAQ:CSCO) CEO John Chambers said he sees a plateau in orders and 2-8 quarters of slow growth. Comments were apparently made at Cisco's Shareholder Meeting. Shares of CSCO traded a session high of $19.96 earlier in the session and now trade near the $19.26 level and unchanged on the session.

Fellow networking stock Ciena (NASDAQ:CIEN) is having a tough time today as this stock trades down 4% at $18.08. Earlier this morning, the stock gapped higher with the broader market, but found seller shortly thereafter. WR Hambrecht downgraded the shares to "neutral" from "buy" citing continued "tough" operating environment, especially in the long-haul, resulting in lower fiscal year 2002 earnings per share.

Ciena Corporation Chart -

Yesterday in the "market monitor" on OptionInvestor.com, I thought shares of CEIN might be an attractive short for a short- term trader at $19 with a stop just above Monday's early morning high of $19.48 or our retracement at $19.55. Little did I know that the Northern Alliance was forcing the Taliban out of key strongholds in Afghanistan. This morning, I suggested that bears cut their losses at $19.70 and concentrate on the rally at hand. Hours later, several firms downgraded the shares and the stock has pulled back. This action along with recent news out of the Cisco Systems (NASDA:CSCO) Shareholder Meeting has seen the Networking Index (NWX.X) +3.24% pull back off its best levels of the session and has also seen some selling take place in other areas of computer-related technology.

Current sector leaders have the Airlines Index (XAL.X) recouping some of yesterday's losses and gaining 3.9% at $67.78. Also posting gains better than 3% are Biotech (BTK.X) +3.93% and the Disk Drive Index (DDX.X) +3.45%.

Sector weakness is hard to find, as the Gold/Silver Index (XAU.X) is down 2% at $53.52 and this is the only sector/index currently trading in the red. Part of the reason for sector weakness in gold stocks today is the strength of the US$ vs. major foreign currencies. This perhaps helps on the "fears of inflation" front and gives US consumers greater purchasing power for imported products.

Jeff Bailey
Senior Market Technician
Option Investor

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