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The Nasdaq closed Friday exactly where it started the year, as technology and Internet stocks suffered yet another steep drop.

The ISDEX http://www.wsrn.com/apps/ISDEX/ dropped 18 to 344, and the Nasdaq fell 91 to 2470, where it began the year. The S&P 500 lost 17 to 1314, and the Dow declined 99 to 10,781. Volume rose to 1.06 billion shares on the NYSE, and 1.9 billion on the Nasdaq. Decliners led 16 to 13 on the NYSE, and 23 to 13 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

Network Appliance surged 3 to 38 3/16 after topping estimates by a penny with 11-cent earnings and said it sees little slowdown in business. Competitor EMC fell 3.10 to 56.40.

Portal Software plunged 2 3/16 to 8 11/16 on a Merrill Lynch downgrade.

EarthLink rose 13/32 to 9 5/16 after the company and Sprint announced amended alliance terms, renewing speculation that Microsoft will make a play for EarthLink.

Register.com rose 15/16 to 7 3/4 after the company's 6-cent earnings beat breakeven estimates.

Audible soared 29/32 to 1 25/32 on a $10 million investment from Microsoft.

Cisco Systems fell 1 13/16 to 28 3/16, continuing its slide after missing estimates and warning earlier this week. Cisco supplier Power-One plunged 3 7/16 to 28 3/4 on an earnings warning.

Digital Insight slipped 3/8 to 14 15/16 after beating estimates. ScreamingMedia.com lost 31/32 to 3 despite besting estimates. Mainspring was unchanged at 2 9/16 despite beating estimates and warning.

Jupiter MediaMetrix slipped 7/16 to 6 after missing estimates by a penny. Mercator, down 2 11/16 to 7 3/4, also missed by a penny. Razorfish, off 3/8 to 1 1/2, and Organic, unchanged at 1 1/4, matched estimates.

Some technical comments on the market: Note: We are now including charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The S&P 100 (first chart) held its uptrend off its December low, but the S&P 500 (second chart) did not. Not an encouraging sign on the S&P 500, given that the Nasdaq and Nasdaq 100 previously broke their uptrends. The market may be range-bound for a while if those lines are not recovered, but we see no technical reason for new lows.

The Nasdaq broke back below its September downtrend line (first chart) this morning, but the S&P 500 held its September downtrend line after piercing it (second chart). 2496 on the Nasdaq represents the 61.8% retracement level of the 2251-2892 gain, so that is an argument in favor of holding around this level. The good news is that the Nasdaq only needs to get to 2550 or so to reclaim its September downtrend line, so we'll know quickly on any rebound if the index has the strength to get through that line. The Philadelphia Semiconductor Index finished close to unchanged today, a big plus, and the Nasdaqs are very oversold, so some sort of bounce should begin next week.

The Nasdaq and Nasdaq 100 could be forming much larger inverse head and shoulders bottoms here - if the indexes can turn up soon. Taking out those necklines could send the indexes well above 3000, but these are purely speculative observations at this point, especially considering that the indexes haven't even begun to turn up yet. But those upper trendlines will be important resistance on any advance.

The Dow held its October uptrend line at about 10,750, and could be forming a bullish ascending triangle if it can stay above that line. To the upside, the Dow continues to struggle at 11,000 resistance. A close above 11,007 would be bullish under Dow Theory, the oldest school of technical analysis, particularly if the Dow Transports can stay above 3000; the Trannies continue to hold above that level. But the 11,000 level has been one tough obstacle for the Industrials, reflecting its importance to the health of the market and the economy as a whole.

Special report: For a free introduction to technical chart patterns and an overview of last year's action in the stock market, visit http://www.internetstockreport.com/guest/article/0,1785,2571_500051,00.html.