The indices managed to squeak out gains with an afternoon rally that put them in the positive column, but the technicals were very flat and non-confirming. Despite all that and the continuing negative divergences, the rally continued today. This wasn't surprising because of options expiration, but the market very well could turn down and maybe dramatically so early next week.

The day started out with a pop-up at the opening on the Nasdaq, but the blue chips didn't follow. They immediately sold off and retested support, bounced a little bit, and then went sideways for several hours in a coiling-type pattern. When the indices failed to break down in the afternoon, they tried the upside, which was successful, taking the NDX to new rally highs up around the 1582 area. At the point the S&P and Dow trailed quite a bit and that caused a last-hour sell-off that brought them down.

Net on the day the Dow was up a little less than 12, the S&P 500 up less than 1 1/2, and the Nasdaq 100 about 4 1/3. The SOX was down about 1/4 point today.

The technicals, as indicated, were near flat. They were slightly positive by about 50 issues on New York and 130 issues on Nasdaq. Up/down volume was slightly negative on New York on total volume of about 1 1/4 billon. Nasdaq traded about 1.5 billion, with up/down volume less than 4 to 3 positive.

TheTechTrader.com board was narrowly mixed with about an equal amount of advancers and decliners. One outstanding stock today was Host America (CAFÉ), which traded 19 million shares, advancing 2.12 today.

On the downside, JAMDAT Mobile (JMDT) ran up sharply in the morning and sold off by nearly 5 points, bounced a little bit near the close, but was still down 2 3/4. The stock had run up earlier today on rumors of a potential takeover.

Other stocks of note on the plus side, Dynamic Materials (BOOM) was up 50 cents, Escalon Medical (ESMC), one of our Charts of the Week Watchboard portfolio stocks, was up 88 cents. Medicore (MDKI), also a Watchboard position, ran to a new all-time high & was up 61 cents. Parlux Fragrances (PARL) was up 45 cents.

On the downside Forward Industries (FORD) was off 84 cents, and CryptoLogic (CRYP) 78 cents. World Poker Tour (WPTE) was down 34 cents.

Stepping back and reviewing the hourly patterns, as indicated the rally price wise continued to new rally highs on Nasdaq. However, the S&P and Dow did not do so, as the blue chips failed to confirm today, and I think we're setting up for a reversal next week after today's options expiration.

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.