The tech-heavy Nasdaq declined 4% in the first two weeks of October. And with earnings season upon us, tech stocks will be volatile in the wake of their earnings reports. If you need proof, take a look at the action in Advanced Micro Devices ( AMD) and Apple Computer ( AAPL) following their earnings reports last week.

It's a tough market environment with negative weekly chart profiles for both the Nasdaq and Philadelphia Semiconductor Index (SOX). The weekly chart profile for the Nasdaq stays negative with a weekly close below its five-week modified moving average at 2119. The SOX stays negative on a close this week below its five-week modified moving average at 461.60. The April low for the Nasdaq is support at 1890, and the key level for the SOX to hold is its 200-week simple moving average at 422.85. Even so, my model shows that technology remains the cheapest sector, at 13.9% undervalued.

This all sets the stage for earnings after the close on Tuesday from Intel ( INTC), Motorola ( MOT) and Yahoo! ( YHOO).

Intel is expected to report EPS of 33 cents. Last week, two Wall Street analysts battled it out over Intel, with Prudential downgrading the stock, and upgrading AMD following AMD's earnings report, while Merrill was bold enough to recommend Intel as a buy on Thursday, ahead of earnings.

I agree with Merrill. At Friday's close of $21.19, AMD was still 20.2% overvalued, while Intel was 23.8% undervalued, making fair value $30.47. Intel's weekly chart profile is negative but oversold, and a weekly close above its five-week modified moving average at $24.69 would be positive, signaling Merrill as right and Prudential wrong. On a negative reaction to earnings, Intel can trade as low as my semiannual value level at $19.90, which is where longer-term investors should add to positions. A positive reaction to earnings will put shares above my quarterly pivot at $23.34. A weekly close above $24.69 targets my monthly risky levels at $26.32 and $27.75.

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