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Alcatel guidance has networkers leading gains

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The Networking Index (NWX.X) 171.08 +4.61% is this morning’s early sector gainer after French telecom equipment maker Alcatel (NYSE:ALA) $7.06 +21% said it now expects its fourth-quarter revenue growth to be in the “high 20% range with operating earnings around breakeven,” which is above prior guidance for Q4 sequential revenue growth of 20% and break-even bottom line before the company would have taken into account exceptional items.

The news out of Alcatel has been viewed bullish as today’s news now hints of some renewed IT spending in the equipment sector, which not only has Alcatel raising revenue estimates for the quarter, but looking at break-even bottom line results for its fourth-quarter when taking into account exceptional items.

Alcatel Chart – Daily Interval

Today’s trade at $6.50 has ALA’s p/f chart triggering a spread- triple-top buy signal, and in this morning’s market monitor, we noted similar technicals unfolding not only in ALA, but the Networking Index’s (NWX.X) conventional $5-box scale at 170.00 and sector bellwether Cisco Systems (NASDAQ:CSCO) $15.53 +1.7%, which traded a spread-triple-top buy signal yesterday at $15.50.

While many technology trader’s eyes and ears will be focused on this evening’s earnings from Intel (NASDAQ:INTC) $17.52 +0.63%, Cisco Systems (NASDAQ:CSCO) is scheduled to release earnings on February 4 after the close of trading. Analysts currently estimate the company to earn $0.13 per share, compared to year- ago EPS of $0.09.

Today’s multiple-spread-triple-top buy signals from the NWX.X and ALA, along with yesterday’s spread-triple top in CSCO show demand beginning to outstrip supply and builds a more bullish look for the networking sector.

The above looks to have the NASDAQ-100 Index (NDX.X) 1,089 +0.6% and QQQ $27.09 holding firm above today’s S1 levels of 1,071 and $26.61, which really didn’t get challenged earlier in the session. Early morning action has seen both the NDX and QQQ come very close to challenging today’s R1 levels of 1,099 and $27.35, as the NDX has traded a session high of 1,097.71 and QQQ came within 3-cents of its R1 with a morning high trade of $27.32.

Jeff Bailey

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