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NASDAQ can't hold morning lows

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Both the NASDAQ Composite (COMPX) 1,178 -3.47% and NASDAQ-100 Index (NDX.X) 838.7 -3.7% broke to new session lows with losses exacerbated to the downside after Microsoft (NASDAQ:MSFT) $45.00 -5.18% lost the $45.00 level after this morning's Financial Times story in which MSFT CEO Steve Ballmer warned that "rough" business conditions in Europe were likely to weigh on the tech industry for the foreseeable future. Mr. Ballmer also said he accepts the economic rationale for treating stock options as a regular business expense, but indicated the company was not willing to get ahead of its peers on the issue.

Shares of QLogic (NASDAQ:QLGC) $27.02 -5.3% have seen a pickup in selling and volume in the last hour as this NASDAQ-100 component after the company reaffirmed previous Q3 forecast of 3-8% sequential revenue growth during their presentation at the Bank of America investor conference. However, the stock sold off sharply as apparently, the Street was expecting a higher number. Point and figure chartist's will note the stock did trade the $27.00 level, which was the bearish vertical count target dating back to August. As such, bears in the stock may want to take some partial profits near-term and remove some risk for the trade.

The widely quoted Dow Industrials (INDU) 7,876 -1.36% continues to hold above its morning lows 7,788 and the 7,800 which may be serving as near-term psychological support. Gains in Citigroup (NYSE:C) $27.50 +2.45%, Philip Morris (NYSE:MO) +1.33% and McDonald's (NYSE:MCD) $18.15 +1.35% are helping offset losses in Intel (NASDAQ:INTC) $14.28 -4.2%, Home Depot (NYSE:HD) $29.97 -4.06% and Wal-Mart (NYSE:WMT) $52.82 -3.4%.

Utility stocks as depicted by the Utility Sector Index (UTY.X) 243.86 -2.27% is extending Friday's losses. On Friday, the sector was hit after Duke Energy (NYSE:DUK) $19.60 -3.92% warned on earnings. Losses today are being felt after the Federal Energy Regulatory Commission ruled that El Paso Corp's (NYSE:EP) $7.24 -38%, El Paso Natural Gas unit, had manipulated California's blackout-plagued power market last year and held back "extremely large amounts" of natural gas needed to fuel the state's power plants.

Jeff Bailey
Senior Market Technician
Option Investor

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