A nasty way to end the week, as the indices closed sharply lower, not far off the session lows, but they did rally in the last hour, sharply, although giving it back towards the end of the day.

The day started out with a slight move higher, and then they dropped very sharply, with the Nasdaq 100 moving from 1762 down to 1700, a loss of 62 points literally in about 20 minutes. It was one of the steeper drops I've seen in a while. They snapped back about 50% and very sharply, but then moved steadily lower in a down-channel for the next several hours, actually taking out the morning lows late in the afternoon before a sharp short-covering-fueled snapback brought them back. The NDX rallied from about 1696 to about 1729, a gain of 33 points inside of about a half hour. The S&P rallied about 24 points in the same period of time. So a very steep rally, but they both pulled back by about two-thirds and then snapped backed in the last 5-10 minutes to pare the losses.

Net on the day the Dow was down 195, closing at 11,950. The S&P 500 fell 27+ to 1288 and change, and the Nasdaq 100 was down 36 1/2 to just under 1714. The Philadelphia Semiconductor Index (SOXX) dropped 10.53, or more than 3%.

The technicals bore out how negative a day it was, with advance-declines more than 5 to 1 negative on New York and about 3 1/2 to 1 negative on Nasdaq, where 2279 stocks declined while only 654 advanced. Up/down volume was about 11 to 1 negative on New York on total volume of a little more than 1.8 billion. Nasdaq volume was almost 11 to 1 negative on just under 2 1/2 billion shares.

As you can imagine, TheTechTrader.com board was extremely negative with many point-plus losers. Leading the way was Aluminum Corp. of China (ACH) down 3.86, DryShips (DRYS) down 2.64, Excel Maritime (EXM) 1.44, and TBS International (TBSI) 1.46 in a very weak shipping sector.

WM on a downgrade by Moody's fell 1.54. UEPS lost 1.30, Cree Inc. (CREE)1.64, Boxer Shorts DECK 1.32, CMG 1.40 and CERN 1.09.

So, a rather negative day to say the least, and there many large fractional losers as well.

Just a couple gainers on our board: Portfolio position DCR, the ultrashort negative oil ETF, closed at 9.23, up 48 cents today. Ascent Solar (ASTI) surprised in the solar sector, up 21 cents, and Hoku Scientific (HOKU) up 29. So a couple pockets of strength in the junior solar group.

Stepping back and reviewing the hourly chart patterns, the indices severely tested and actually took out nominally Thursday and Friday morning support, but failed to follow through and then snapped back later in the afternoon to pare the losses. But it was still a very negative day today, and by the way they're setting up now unless we can hold them in this range the indices have potentially more sharp downside if they crack the weekly lows at about the 1673-74 area on the Nasdaq 100 and the 1272 area on the S&P 500.

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.