The markets had a definitive down day today, starting out with a big down gap and having a persistent sell-off wave all morning.  About a half hour before lunch the indices saw their lows for the day, reaching right at key support at 1700 on the Nasdaq 100 and 1357 on the S&P 500.  At that point they staged a 5-wave recovery rally that lasted throughout the afternoon, until the last hour or so.  The indices recovered about half to two-thirds of their early declines, but rolled over in the last half hour and gave back a portion of the rally, after completing the fifth wave of that rally.

Net on the day, the Dow was down 30, but closed about 63 points off its low.  The S&P 500 was down 5, but about 8 points off its low, and the Nasdaq 100 down 18, around 10 points off its low.  So they obviously recovered.

The Philadelphia Semiconductor Index (SOXX) had a horrible day today, closing down 11 3/4, despite being about 3 points off its low.

The technicals were negative all day.  The ratio of advancing over declining issues did improve to 5 to 3 negative on New York and 3 to 2 negative on Nasdaq.  Up/down volume was more than 2 to 1 negative on New York with about 1 Ã,½ billion traded.  Nasdaq traded 2.1 billion with a little less than a 2 to 1 negative ratio.  So, a decidedly negative session today both price-wise and breadth-wise.

TheTechTrader.com board was mixed to mostly negative.  On the downside, loss leaders were Broadcom (BRCM) down 1.53, Apple Computer (AAPL) down 1.11, and Energy Conversion Devices (ENER) down 1.19.  NVE Corp. (NVEC) gave back 1.37.  Those were the point-plus losers.

The SMH gave back 82 cents.  Other losses of note, Qualcomm (QCOM) lost 88 cents, Radio Shack (RSH) 52 cents, Rambus (RMBS) 53 cents, and U.S. Global Investors (GROW) 75 cents.

In the lower-priced sector, Fuel Tech (FTEK) gave back 56 cents, ANGN 43 cents and OraLabs (OLAB) 57 cents

On the plus side there were no point-plus gainers on my board.  But II-VI, Inc. (IIVI) had an excellent session, considering the market, up 88 cents to a new all-time high, closing just 2 cents off its high for the session.  Acorda Therapeutics (ACOR) gained 60 cents on more than 5 million, ViroPharma (VPHM) was up 59 cents, and Versant (VSNT) 40 cents.  Sigma Designs (SIGM) snapped back a point off its session lows, and closed up 31 cents, on just under 1 million shares.

Stepping back and reviewing the hourly chart patterns, the indices thrusted hard and lower this morning, but snapped back in a somewhat impressive manner, especially on the S&P and Dow.  But a violation of todayââ,¬â"¢s lows over the next day or two would be key.  Weââ,¬â"¢ll be watching 1700 NDX and 1357 S&P to see if those levels can hold and the market can continue to rally, or if they are taken out, in which case we could have an extension of the decline and a much steeper retracement.

Secondary lows beneath todayââ,¬â"¢s lows to keep an eye on are 1678-80 NDX and 1343-45 S&P.

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.