The indices continued yesterday's decline by starting the day moving lower in the morning, making new lows for the decline.  Then a slow steady snapback from about 10:30 to about 1 o'clock brought the indices right back to key resistance.  The NDX 1672 level, which was the prior neckline on the head-and-shoulders pattern, was tested and failed. As a result the market rolled over in the afternoon, with the Dow and S&P 500 retesting the lows, before a late bounce brought them off the lows for the day.  The NDX made a higher low and bounced, but both indices failed to get through initial resistance before the market closed.

Net on the day, the Dow was down 31, the S&P 500 off just 0.3, and the Nasdaq 100 up 0.7.  The SOX was up 2 ½ points, but that was about 5 off the earlier high.  The SOX led most of the rally, and, likewise, when it rolled over it led the market down

The technicals were mixed to lower.  NYSE advance-declines were negative by 41 issues.  Nasdaq was negative by just under 300 issues. Up/down volume was 7 to 6 negative on New York and 9 to 7 negative on Nasdaq.  Total volume on New York was over 1.4 billion, and Nasdaq was nearly 1.7 billion.

The majority of stocks on TheTechTrader.com board were lower but mostly fractionally so.  Loss leaders were Neoware Systems (NWRE), which gave back some of yesterday's gain, off 1.  Energy Conversion Devices (ENER) gave back 93 cents.

Other losses of note, BioCryst Pharmaceuticals (BCRX) fell 38 cents, Internet Initiative Japan (IIJI) 36 cents, and NeoMagic (NMGC) 41 cents.

On the plus side, Viisage (VISG) reverse split 2 ½ for 1 today, and then advanced 1 point to a new 10-month high.  Dynamic Materials Corp. (BOOM) gained 74 cents, and Vertex Pharmaceuticals (VRTX) 29 cents.  But most other stocks on my board were very narrowly fractionally mixed today.

Stepping back and reviewing the hourly chart patterns, obviously the Nasdaq 100 had broken a head-and-shoulders type top pattern, snapped back to resistance at the neckline and failed, whereas the S&P and Dow have held up at higher levels and not taken out key support yet.

So we'll be watching the 1250 area on the S&P 500.  If that's broken it will confirm the downtrend on Nasdaq as being legitimate and perhaps further declines will ensure.

Until that occurs the jury is still out as to whether this is just a normal pullback in an ongoing up-phase, or whether something more severe may be starting to the downside.

Good trading!

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.