The indices had a strong snapback rally price-wise, but underlying technicals belied the advance and did not confirm the price strength of the rally, causing me great concern. The day started out with a move down. They severely tested last week's lows on the NDX and took them out on the S&P 500, but just slightly. When there was no downside follow-through, they started a 5-wave rally into the middle part of the session. They peaked there and pulled back in a 3-wave decline that held support for a couple hours. At that point they started a late afternoon rally that was steady and strong and spiked up into close.

At the end of the session, the Dow was up 287, the S&P 34 Ã,½, and the Nasdaq 100 nearly 36. But the underlying technicals only managed to get back to 1785 to 1550 positive on advance-declines on New York, just 235 stocks higher. That's about as poor as I've seen on that big a rally, perhaps ever.

Up/down volume, however, was quite positive by 2 Ã,½ to 1, with a total of nearly 2.3 billion on the NYSE. Nasdaq had about a 17 to 9 Ã,½ up/down volume ratio, but advance-declines were negative by 180 issues, a very poor performance indeed with the Nasdaq 100 up 36.

So it remains to be seen if this was a meaningful advance, or just strong short-covering and bargain hunting off of a steeply oversold condition.

TheTechTrader.com board was mostly lower, but there were some outstanding stocks on the upside, however. Eschelon Corp. (ELON) gained 2.30, or more than 10%, and had a very strong snapback day. Vertex Pharmaceuticals (VRTX) also had a stellar day, up 2.54 to a new 6-month high. Those were the only point-plus gainers on our board.

Large fractional gainers included Accredited Home Lenders (LEND), up 78 cents on 11 Ã,¼ million. LSB Industries (LXU), former Chart of the Week, was up 81 cents. Ceragon Networks (CRNT), a former Chart of the Week, was up 54 cents, and Cree Inc. (CREE) was up 46 cents. SMH was up 52 cents, and the Q's up 55 cents.

On the downside, shipping stocks took it on the chin. DryShips (DRYS) fell 2.69, Excel Maritime (EXM) 2.91, and Euroseas (ESEA) 1.04.

China Grentech (GRRF) was down 1.31, a big percentage loss there. JA Solar (JASO) in the weak solar group was down 1.81. Research Frontiers (REFR), a portfolio position, gave back 1.01, and STEC Inc. (STEC) gave back 1.07.

China Medical Technologies (CMED) got hammered below 30 down to 27.35 before rallying more than 3 points and closing down 1.43 on the day.

Other losses in the Chinese sector included Aluminum Corp. of China (ACH), down 2.44.

Stepping back and reviewing the hourly chart patterns, the indices held last week’s support lows on the Nasdaq 100 near 1912 despite lower lows on the S&P 500, and then rallied sharply in the morning, pulled back in the early afternoon, held support, and then came on strong at the close to close near the three-week declining tops line on the Nasdaq 100 and near resistance on the S&P as well.

So we'll see if there's any upside follow-through, but it wouldn’t surprise me if they backed off tomorrow morning.

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.