It was an extremely volatile day, down in the morning, bounced around mid-day, and then rallied sharply in the afternoon.

The day started out with a gap lower. They had an immediate snapback rally that failed, and then they rolled over sharply, testing Monday's late afternoon lows on the Nasdaq 100 and the session lows on the S&P 500. A sharp bounce ensued, a rollover occurred in early afternoon that retested the lows and created a double bottom. The market started to rally on rumors of a potential Fed rate cut that was imminent, and a very strong rally ensued, taking the Dow from a more than 205-point loss, closing down 0.98, making back all its losses.

The S&P 500 rallied from 1489 to about 1516, 27 points, still down 3.71 on the day. The Nasdaq 100 jumped from 2140 to 2188, a 48-point rally but still down 16.60 on the day. The Philadelphia Semiconductor Index (SOXX) was down nearly 17 today, although that was down as much as 26 at one point. That was still a 3 1/2 % loss, a steep slide that pressured Nasdaq for most of the day.

Despite the strong rally back, the technicals did not get back into the plus column, with advance-declines 5 to 3 negative on New York and about 2 to 1 negative on Nasdaq. Up/down volume was 3 to 2 negative on New York on a little less than 1.6 billion shares, and about 3 1/2 to 1 negative on Nasdaq, on heavy volume of about 2 3/4 billion.

TheTechTrader.com board was very mixed, with several large losers and gainers. On the plus side, low-priced Transmeta (TMTA) announced a huge settlement of up to 1/4 billion dollars with Intel (INTC), and the stock exploded for more than 10 points, closing up 9 3/4 on 9.6 million shares, a fantastic percentage gain of 233% coming off its all-time lows yesterday.

Superconductor (SCON) had a stellar day, climbing 1.30 on 3.8 million shares and setting a new 2-year high. But that was pretty much it for the big gainers on my board.

Fractional gainers included FONR up 53 cents, Harmonic Lightwave (HLIT) up 36 cents, SPIR up 95 cents to a new multi-year high. Research Frontiers (REFR) advanced 30 cents, Cepheid (CPHD) snapped back 35 cents, and low-priced Corcept Therapeutics (CORT) jumped 26 cents.

On the downside, Aluminum Corp. of China (ACH) fell 3.13, and shipping stocks were weak, with DryShips (DRYS) down 3.71, Excel Maritime (EXM) 1.41, and TBSI down 1.51.

Sigma Designs (SIGM) fell 1.83, Global Solutions (GSOL) 2.09, Eschelon Corp. (ELON) 2.47 and the SMH 1.07.

Stepping back and reviewing the hourly chart patterns, a steep morning slide held at key short-term support, and was successfully retested late in the afternoon. When those levels held, the market embarked on a strong afternoon rally fed by rumors of a Fed discount rate cut.

Despite the fact that they closed at the highs for the day, they still did not manage to take back all the gains and closed in the loss column, but just slightly so on the Dow.

We'll see if they can get a follow-through tomorrow, as the indices closed near key short-term overhead resistance, and that may be difficult to do.

Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a free 15-day trial to his Real-Time Technical Trading Diary, or sign up for a free 30-day trial to his Top Charts of the Week service.