It was another down day today to follow-up yesterdayââ,¬â"¢s sell-off.  We had some serious testing of key support today. 

The day started out with some very slow back-and-forth action before a morning dip.  The indices held near initial support and then tried to bounce but did so correctively, forming bear flags.  They sold off sharply out of the bear flags, bounced around mid-day and then another sell-off in early afternoon took them to the session lows.

The NDX dipped slightly under 1760, a key 7-week support level, before snapping back 10 points, and then pulling back a little bit into the close.  The S&P 500 didnââ,¬â"¢t even look that good and formed another bear-flag type pattern into the closing bell.

Net on the day, the Dow was down 42 1/2, the S&P 500 5 1/4, and the Nasdaq 100 11.64.  The Philadelphia Semiconductor Index (SOXX) was down 6.38 today, rounding out the losses.

The technicals were negative today by 3 to 2 on advance-declines on New York and 17 to 13 on Nasdaq.  Up/down volume was 2 to 1 negative on both exchanges.  Volume on New York was about 1 1/3 billion and on Nasdaq was about 1 2/3 billion, similar to yesterdayââ,¬â"¢s figures.

On TheTechTrader.com board, the plus-side was led by portfolio position Chindex (CHDX), up 1.49 after an upgrade.  Halozyme Therapeutics (HTI) was up 81 cents, following up  this weekââ,¬â"¢s strong rally. Mamma.com (MAMA) continued its strong rally this week, hitting as high as 8.60 before backing off into the close, still up 64 cents at 7.95 on 53 million shares traded today.

Low-priced Internet video media play, OnStream Media (ONSM), closed up 1.03 on 22 Ã,½ million shares, a gain of 45 percent.  Portfolio position China GrenTech (GRRF), which lagged yesterday, snapped back 34 cents today.  Euro Tech Holdings (CLWT), a Chinese water pollution control play, was up 25 cents on 1 million shares.  Portfolio position AdStar (ADST) broke out above key resistance and closed up 35 cents.

On the losing side, Chinese hotelier Home Inns & Hotels (HMIN) was down 1.32 and SIGA Therapeutics (SIGA) down 1.10 on 11 Ã,½ million shares.  Those were the point-plus losers.

Other losses of note, Energy Conversion Devices (ENER) gave back 56 cents, Escala Group (ESCL) 55 cents, Gmarket (GMKT) 61 cents on profit-taking, and Rambus (RMBS) 51 cents.

Stepping back and reviewing the hourly chart patterns, the indices dipped further, testing key support on the Nasdaq 100 and on the S&P 500.  But they bounced late in the session to avoid a key breakdown.

Those levels are 1759-60 on the NDX and the 1415-16 area on the S&P 500.  A break through those levels could trigger additional selling and lower prices.

Tomorrow is the last session for TheTechTrader.com, as we are on vacation next week, and this will be the final closing report.

Have a nice holiday, and watch next week for our special year-end reports of top stocks for 2007 as well as a separate report on top Chinese stocks for 2007.

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.