The stock market seems to be stabilizing after yesterday’s selloff, with the Dow Jones average up 120 points, and the Nasdaq up 24 points in early trading. We’re starting to see a trend where we have more days in positive territory than not – a historical sign that suggests the pros think we’ve hit some kind of bottom in the stock market.

Analysts are also starting to weigh in on the relative health of technology stocks. Here’s a glimpse of analyst tech picks compiled by this morning . . .

➢ Rated new Hold at Jefferies. $54 price target. Valuation call even though the company should continue to grow faster than the industry in the long term.

➢ Bristol-Myers Squibb: Upgraded at Citigroup from Hold to Buy. $25 price target. Company has among the best 3-year growth potential in the industry and an attractive 6% dividend yield.

➢ Electronic Arts: Downgraded to Neutral at Bank of America. $18 price target. Electronic Arts downgraded at Smith Barney to Hold from Buy. Price target lowered to $21 from $31. Fiscal 2009 EPS estimate lowered to $0.70 from $1.05. Electronic Arts price target cut at Goldman to $22 from $36. Maintained Buy rating.

➢ Apple: Numbers lowered at Morgan Stanley. Estimates cut through fiscal 2010. U.S. consumer survey suggests lower demand for iPhone, despite price cuts. Equal-weight rating and new $95 price target.

One company that could face some more negative returns this week is Nortel Networks. Today’s Wall Street Journal breaks a big story there, as Nortel apparently has sought legal counsel to figure out what would happen if the telecom giant were to slide into bankruptcy. Nortel has been trying to flog a restructuring plan to shareholders, even going so far as to begin negotiations with the Canadian government for a much needed cash infusion (I’m getting tired of writing the word “bailout”).
The Journal cites one Nortel insider who says that a bankruptcy isn’t “imminent” but the company is developing a plan to go to bankruptcy if it needs to. The same spokesperson said the company had enough cash stashed away to keep things afloat for the next 18 months.

The Journal says that Nortel’s fall has been a dramatic one: “Nortel was once Canada's largest company. Nortel's market value topped $250 billion in 2000 amid the telecom boom, but has since shriveled to $275 million. The company's stock has been trading below the $1 minimum on the New York Stock Exchange for a month,” the newspaper says.

Wow. Nortel doesn’t have any margin for error and you have to wonder whether it will survive at all, bankruptcy plan or no bankruptcy plan. The stock might get a bump from the news, but it likely isn’t sustainable.

So run, don’t walk, away from this former high flyer that looks like it’s ready to bite the dust.