The indices had a negative session, but the day started out interestingly to the upside, with the NDX making new rally highs.  When the S&P failed to do so and created a negative divergence, they then rolled over and sold off for the rest of the session.

Only a late bounce brought them back from the lows for the day, but the Dow was down nearly 111 points, the S&P down 11 3/4, but the Nasdaq was a little better today due to the SOX being on the upside.  The NDX was down 4 3/4 and the Composite only 7.67, while the SOX was up 1.15.

The technicals, however, were very negative by 24 to 9 on advance-declines on New York and about 3 to 2 negative on Nasdaq.  Volume was heavier to the downside than it was yesterday to the upside, with about 4 to 1 negative on New York on total volume of about 1.55 billion.  Nasdaq had nearly 1 3/4 billion traded, with about a 9 to 8 negative ratio, so not as bad as New York today.

TheTechTrader.com board was mostly narrowly mixed, but there were a few outstanding issues.  Dynamic Materials (BOOM) gave way today to profit-taking by nearly 2 1/2 points.  That was the only plus 1-point change up or down on my board today.

On the plus side, Digital Insight (DGIN) was up 52 cents and Arena Pharmaceuticals (ARNA) snapped back 30 cents, along with Taser (TASR) up 54 cents and Broadcom (BRCM) 40 cents.

On the downside, Parlux Fragrances (PARL) was down 90 cents, NovAtel (NGPS) 95 cents, Energy Conversion Devices (ENER) 95 cents, and Stamps.com (STMP) down 70 cents.

Stepping back and reviewing the overall patterns, the disconcerting part about this week is that the rally came on lower volume than the decline did and the pullback has now reached a significant short-term level on the S&P 500 near the 1155-60 zone.  It looks like we're going to get a severe test.

Nasdaq, however, is holding up a little bit better and is far off yesterday's low.  We'll see if the NDX can pull the market back up or if the blue chips create enough pressure to take the whole market lower and we test lower levels.

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.