The markets closed very negatively today and tested some very key support late in the session. But the day started out differently as the Nasdaq gapped up on Intel news, although the S&P failed to participate.  When that was apparent, the market pulled back sharply early in the morning but then rallied in a two-step move that took the NDX and SPX to slightly new rally highs.  But no solid follow-through occurred and they came down for the rest of the session in a very distinct intraday down-channel. 

Only a late bounce brought them off the lows. 

The Dow, in particular, tested 10,000 within a few pennies, bounced a little bit at the close, but still closed down 115 on the day.  The S&P 500 broke the 1140 low of Monday, getting down to as low as 1136, closing at 1137 1/2, down 15 1/4.  The Nasdaq 100 tested its 1405 support and bounced a tad, but still closed down nearly 14.  The Nasdaq Composite was down 18.60, and the SOX was down more than 2 percent, or 8.59 points, and really pressured Nasdaq today.

The technicals were very negative, as decliners lead advancers  by 3 to 1 on New York and 2 1/2 to 1 on Nasdaq.  Up/down volume was even worse by 6 to 1 negative on New York and about 2 to 1 on Nasdaq.  Total volume was close to 1 3/4 billion on New York and 2 billion on Nasdaq.

TheTechTrader.com board was very mixed.  On the plus side, AIRT, on news of a government contract, was up 2.05.  BOOM, after a hitting a new rally high at 29, dropped sharply by 4 points, closing down 2.28 on the day on nearly 4 million shares, a big reversal there.

CRYP was down 1.24, ENER down 85 cents, FORD 66 cents, and MDRX 47 cents.  Those were the loss leaders on my board.

The SMH dropped 53 cents and QLGC 73 cents.

JNPR, a standout, was up 1.37 today on an upgrade by Merrill Lynch.

Stepping back and reviewing the overall patterns, the NDX severely tested its lows of Monday and bounced just a tad at the close, but the S&P and Dow broke their recent lows, with the Dow holding 10,000 but just barely.

There are several positive divergences on the technicals, and we may be setting up for an important low shortly, but downside momentum is in force and we could still go lower before seeing an important reversal.

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.