The indices had a sharply lower session on Tuesday and broke to the downside, taking out key short-term support.  The morning saw a particularly sharp sell-off.  They bounced around mid-day but continued lower in the afternoon.  A last hour rally back to resistance failed, and they closed back down near the lows for the day.

The Dow was down 120 1/2, the S&P 500 down 11 1/3, and the Nasdaq 100 more than 29,  but the story of the day was the Philadelphia Semiconductor Index (SOXX), down nearly 17, more than 4 percent, leading Nasdaq lower.

The technicals were decidedly negative and confirmed the bad day today by about 24 to 9 on advance-declines on New York and 23 to 7 Ã,½ on Nasdaq.  Up/down volume was 4 to 1 negative on New York with more than 1.5 billion traded.  Nasdaq traded nearly 1 2/3 billion with about a 7 Ã,½ to 1 ratio on down volume over up volume.

TheTechTrader.com board  was mostly negative, with only a couple of stocks higher.  NOIZ had a stellar day on a terrific earnings report, up 2.88, a large percentage gain there, and was Nasdaqââ,¬â"¢s percent gain leader today, up 23 percent.

On the downside, thereââ,¬â"¢s plenty to talk about.  Loss leaders were Apple Computer (AAPL) down 1.56, DXP Enterprises (DXPE) 1.55, Qualcomm (QCOM) 1.40, and Broadcom (BRCM) 1.55.

Other losses of note, Pacific Ethanol (PEIX) fell 1.26, Zevex (ZVXI) 76 cents, and the Qs (QQQQ) down 76 cents.

Stepping back and reviewing the hourly chart patterns, the six-week decline off the May highs continued today as the NDX got precariously close to the early June lows, and we may be testing that as early as tomorrow, about 10 points below where they closed.

The S&P 500 has short-term support in the 1238-40 zone, near where it close today, and any move below that could trigger a retest of the early June lows down around 1220. However, in terms of wave analysis, this appears to be the fifth wave down off the May intermediate highs and may be the final wave, but it could easily get ugly for a day or two before we get a snapback rally.  Although some of the indicators are becoming oversold, it appears we could be leading up to a climax low over the next day or two, which could coincide with the Fed announcement on Thursday. Stay tuned!

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.