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Editor's Note: This story was originally published Aug. 10, and has been updated to correct an error.

The economic environment is extremely positive for technology for the remainder of 2005 and into 2006, as I have often written over the last few months. But I see some red flags that indicate there are factors in play that could impede the progress of the bull market for the



that began at the end of April.

First, though it may not be showing it right now, the market is nervous about just how high the FOMC will raise the fed funds rate. I believe the

Federal Reserve

will raise the rate to 4%, then shift to a neutral policy stance. Investors also are concerned about volatile crude oil prices. The market's threshold of pain appears to be $62 per barrel on crude oil.

I see more cause for a blow to investor confidence. My daily chart profile for the Nasdaq warns of a correction, and its weekly chart profile is overbought. While a correction does not appear imminent, a close below 2162 on the Nasdaq would warn of a three- to five-week swoon.

And tech leader


(CSCO) - Get Cisco Systems, Inc. Report

reported record earnings last night, but current-quarter guidance was a bit shy of expectations. Despite Wall Street's disappointment with Cisco's guidance, I have not seen any major broker downgrades. Wall Street has, for the most part, maintained outperform and buy ratings on the stock. For example, Bank of America cut its EPS estimates for Cisco and lowered its price target to $22 from $24, but kept its buy rating on the stock.

Cisco's lower open this session makes the stock 35.7% undervalued, so the stock's fair value remains $28.79. Those who still believe in the stock and want to maintain a core holding but

trade around it will want to keep an eye on Cisco's monthly value level, which my model shows at $18.30, with the stock's 200-week simple moving average at $18.12. As I wrote in the

Tech Trading Diary Tuesday, I expect this $18.12 level to act as strong support.

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Looking to Thursday's Reports

Here are my profiles for the companies that will report earnings Thursday after the close. After pointing out the risks to the tech sector, I'd like to highlight one factor that could help stabilize technology as a whole on Thursday: Bellwether

Dell Computer

(DELL) - Get Dell Technologies Inc Class C Report

has been sliding in price, but held its 200-day simple moving average on Monday.

Dell is expected to report EPS of 38 cents Thursday afternoon. The leading PC maker is only 4.4% undervalued, with fair value at $41.71. Its weekly chart profile is currently negative, but a weekly close above the five-week modified moving average at $40.05 would shift the profile to neutral, and signal an improving stock price. However, a negative reaction to earnings should lead to a weekly close below my monthly value level at $38.94, which could begin a trend toward the 52-week low at $32.70. The upside on a positive reaction to earnings should be limited to my semiannual risky level of $41.12.

Also up after Thursday's bell is

Analog Devices

(ADI) - Get Analog Devices, Inc. Report

. The maker of both analog and digital signal-processing integrated circuits is expected to report EPS of 31 cents. My model shows AD 16.4% undervalued heading into its earnings report, which makes fair value $44.85. Its weekly chart profile shifted to negative last week with a close below the five-week modified moving average at $38.46 and the 200-week simple moving average at $37.54; a negative chart profile indicates that share price is declining.

As I've noted in previous columns, shares can enter a period of significant volatility following earnings. A negative reaction to earnings should result in a weekly close below my monthly value level at $36.95, which indicates risk to the 52-week low at $31.36. A positive reaction to earnings should result in a weekly close above a monthly pivot at $37.49, which should begin a trend toward a new 52-week high. My quarterly risky level, which marks the next upward horizon for the stock, is $42.99, well above the current 52-week high of $41.66.


(CREE) - Get Cree, Inc. Report

is expected to report EPS of 27 cents after the close Thursday. Cree makes semiconductor materials and devices, and, according to my model, it's currently 9.7% undervalued. Fair value for the stock as it approaches earnings is $30.18.

On a negative reaction to earnings, a weekly close for Cree below the five-week modified moving average at $27.27 would shift the weekly chart profile to negative. That indicates risk to my monthly support at $22.03. A positive reaction to earnings should result in a trend above a weekly pivot at $27.35, which would target a retest of chart resistance at $30.90.

After Thursday's close, analysts expect


(NVDA) - Get NVIDIA Corporation Report

to report EPS of 34 cents. Nvidia makes graphics processing units (GPUs), media and communications processors (MCPs) and wireless media processors (WMPs) for a variety of computing platforms worldwide. My model shows Nvidia 58.3% undervalued as it heads into earnings. Its weekly chart profile is neutral, with the five-week modified moving average at $27.02. A positive reaction to earnings should lead to a new 52-week high; my quarterly risky level is $31.02, and the current 52-week high is $29.60. On a negative reaction to earnings, a weekly close below $27.02 would indicate risk to the 200-week simple moving average of $24.37, with quarterly support well below that at $21.83.

As originally published, this story contained an error. Please see

Corrections and Clarifications.

Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of Technology Report

newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury Bond Trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury Strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback --

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