The markets ended near the lows for the session, but the day started out very differently, with a gap-up in the morning and a quick run to new S&P highs. But the Nasdaq 100 got up to just underneath its recent high, failed to take it out and at that point the market sold off sharply. In a period of less than an hour the Nasdaq 100 dropped from 1635 to 1599, about 36 very fast points. The S&P in that same period dropped from about 1217 to about 1206. Then for the rest of the morning and through the lunch hour into early afternoon the Nasdaq 100 backed and filled with a slightly higher bias, while both the S&P and Dow kept making lower lows. In the afternoon they finally dragged the Nasdaq down.

The Dow was down 53 1/2 and about 140 points off the earlier high. The S&P 500 was 15 points off the earlier high and down nearly 10 on the day. The Nasdaq 100 was down 17.60 but 33 points off the high, and the Nasdaq Composite was down 23.29, about 40 points off the high.

So, it was a negative session to start the new year. Nasdaq was exacerbated by the SOX Semiconductor Index, down 9 points and about 13 points off the high for the day.

The technicals were very negative by 3 to 1 on New York and about 2 1/2 to 1 on Nasdaq. Up/down volume was 3 1/2 to 1 negative on New York and a little more than 2 to 1 negative on Nasdaq. Total volume was rather light on New York at about 1 1/4 billion, but robust on Nasdaq with more than 1.9 billion traded.

Reviewing TheTechTrader.com trading board today, there were a couple outstanding issues both ways. RF Industries (RFIL), a new one we traded today, exploded for 4.80 on 2.5 million shares, a tremendous percentage gain and a Nasdaq percentage leader today.

WorldGate (WGAT) at 6.18 was up 1.19 to a new 3-year high on 4.7 shares, heavy volume there. Other stocks of note, Applied Digital (ADSX) was up 18 cents on 3 million shares.

Other than that, the only other stocks of note were on the losing side, with Taser (TASR) down 1.67 and Mikron Infrared (MIKR) giving back 1.20 of its recent gains. But it had been nearly 4 points higher in the morning, so a tremendous negative reversal day there on nearly 5 million shares.

Stepping back and reviewing the overall patterns, the indices on their hourly charts plunged down through their 21- and 40-day moving averages and through a couple layers of minor support, and tested major short-term support at 1600 on the Nasdaq 100 and 1200 on the S&P 500.

Any downside follow-through here could test key lower levels in the 1580-90 zone on the NDX, and we're not far from that. If those are broken, then we may have completed a top formation and the market could be in trouble for a period of time.

The S&P 500 key levels we'll be watching are the 1190-93 zone.

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.