This time around, we didn't even wait until we reached an overbought reading before the rally failed. So far, all the Nasdaq has seen is one bear-market rally after another, none of which is worth buying. Each one is taking that average to a lower low.

Volume continues to be the thing to watch in here, as the "up" days are still producing less volume than the "down" days on the Nasdaq. Friday's Nasdaq volume once again edged up into the 2 billion zone, where it hadn't been on the rally days earlier in the week. Even IBM (IBM:NYSE - news - boards) saw about twice the volume during Friday's slide than it did during the previous "up" days. (See Thursday's column for a fuller explanation of the IBM chart.) When this trend reverses, we can have more confidence in the rallies.

On the New York Stock Exchange, which continues to act better than the Nasdaq, I'm keeping my eyes on the New York Financial Index again. This index is hovering very close to an important uptrend line. A key level to watch is 590, as that would break the uptrend line as well as make a new low. The reason I say a new low is because up until now, the only thing this index has done wrong is make a lower high back in late January/early February. (See my Feb. 7 column for a detailed discussion of the financial stocks.) A break of a previous low (in this case, 597 on Feb. 23) would be the second thing this index has done wrong.

This level is also important to watch because if it holds, it will be telling us we're a lot later in the selloff than we think.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.