Today was about as bad a session as you can get following a huge rally like we had yesterday.  An amazing turnabout of events! 

The market started with a gap down and pretty much went lower all session.  It did have 3-4 rally attempts that made successive lower lows and lower highs, and at the end of the day the indices tested key support going back several weeks on the Nasdaq 100 at around the 1460 area and on the S&P at around 1170.  They did bounce late in the session to avoid breaking down, but it was ugly at the close.

The Dow lost 104, the S&P 500 fell around 14, the Nasdaq 100 was down 27 1/2 and the Composite off 31.  Most importantly, the SOX Semiconductor Index was down 11 1/4, or pushing 3 percent today, and that was a real drag on Nasdaq.

The technicals were very negative, with 3 to 1 on decliners over advancers on New York and a similar amount on Nasdaq.  Total volume was about 1.6 billion on New York with 1.3 billion of it to the downside, a ratio of about 4 1/2 to 1 negative.  Nasdaq traded more than 1.7 billion with about a 5 to 1 negative ratio.

So, a nasty day on the Street indeed!

TheTechTrader.com board was littered with red.  The loss leaders were junior energy stocks, led by Geo Resources (GEOI), down 1.23, continuing its recent pullback.  NovAtel (NGPS) also gave back 1.23, Energy Conversion Systems (ENER) was off 70 cents, Air T (AIRT) fell 64 cents, Dynamic Materials (BOOM) was down 43 cents, Medicore (MDKI) off 54 cents, and Sigma Designs (SIGM) got knocked for 61 cents.

On the plus side, there were just a few scant gainers.  Allscripts Healthcare Solutions (MDRX) was up 29 cents and Forward Industries (FORD) ahead by 42 cents.

Stepping back and reviewing the overall patterns, as mentioned the indices are at key support that has held over the last several weeks, and we're going to get a very severe test tomorrow. 

If a breakdown does occur, we could see substantially lower prices and quickly, but that could set up a very oversold condition.

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.