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THE WEEK AHEAD: Traders look to Fed, dollar for guidance

These are dangerous times for investors. With the Federal Reserve Board meeting the first week of October and the U.S. dollar falling to a three-year low against the yen, there's little cause for celebration heading into the last week of September.

You can bet next week's hot topic will be the Fed meeting, but quietly the dollar's weakness has suddenly become a major source of consternation.

It didn't help that Taiwan, a major hub of semiconductor manufacturing, was rocked by a 7.6 magnitude earthquake or that Microsoft President Steve Ballmer decided to put the fear of God in investors when he called technology stocks "absurdly" overvalued.

It should come as no surprise that U.S. stocks were hammered throughout most of the week. For the week, the Dow Jones industrial average plummeted 534 points to end at 10,279.33 while the Nasdaq fell 129 points to close at 2,740.41.

Making matters worse, the S&P 500 Index fell below the 1,300-point threshold, a crucial figure to technical analysts, and the Dow slipped well below its 200-day moving average.

Most of these technicians said the Dow probably needs to fall even farther, perhaps below the 10,000-point level, before any substantial rally can emerge.

"The likelihood of any rally that starts around here (these stock levels) having any chance of success is between none and zero,'' said Ralph Bloch, chief technical analyst at Raymond James and Associates.

The drop through 10,500 ``instilled the perception that the market is getting into more trouble,'' said Greg Nie, technical analyst at Everen Securities Inc. in Chicago.

Investors looking for a glimmer of sunshine amid all the storm clouds should look to the Internet sector. Despite the ever-present possibility of an interest-rate hike next month, leaders such as America Online Inc. (NYSE: AOL) and Yahoo! Inc. (Nasdaq: YHOO) ended the week with a nice rally.

Cowen & Co.'s Drew Peck through another wrench into the works Thursday when he called chip and chip-equipment stocks overvalued and near their peaks. Whether he's right or not, those stocks took a pounding Friday.

Looking ahead to next week, aside from the certain Fed watch, investors can expect earnings from the likes of CMGI (Nasdaq: CMGI) and Micron Electronics Inc. (Nasdaq: MUEI).

First Call consensus expects CMGI to post a fourth-quarter loss of 31 cents a share.

CMGI shares, which peaked at 165 in April, gained 3 1/16 to 84 13/16 Friday.

All nine analysts watching its shares maintain either a "buy" or "strong buy" recommendation.

As for Micron Electronics, the analysts are expecting a profit of 7 cents a share in its fourth quarter.

Its shares have fallen from a 52-week high of 24 3/4 in November to Friday's close of 12 1/16.

Twelve of the 18 analysts following the PC maker maintain a "hold" recommendation.