What a Week: Blue Crush

Ouch.

Triple-digit losses for the Dow. Decade lows for General Motors(GM Quote). A tech sector in disarray. It added up to the worst weekly performance for the major indices since August 2004.

Just as the market entered what should have been a redemptive earnings season, evidence of slower economic growth, oil's bite, and disappointing tech earnings pulled the carpet from under investors' feet.

A sharp downturn on Friday marked the third selloff session in a row for stocks and was indicative of the overall mood. Market nervousness ahead of the weekend was palpable, with the CBOE's volatility index soaring 16.6% to close at 16.65, flying by its previous upside resistance level at 14.50

In the footsteps of IBM's(IBM Quote) profit-warning Thursday, the market was greeted with evidence of a regional economic slowdown in the Northeast, rising import prices and waning confidence.

Most economists, until this week, were calling for slower growth in the second half, as the U.S. economy prepared for a Greenspan-engineered soft landing. But those calls, it seems, had not fully taken into account the surging price of oil, which worsened an already huge trade deficit, weakened consumer sentiment and crimped retail sales and earnings.

For the week, the Dow Jones Industrial Average hemorrhaged 372 points, or 3.5%, to end at 10,089, a five-month low. Between Wednesday and Friday, the blue-chip average lost more than 400 points, or 4%, including a 198-point hammering on Friday, its worst single-day point decline since March 2003.

The S&P 500 fell 3.2% for the week, losing 1.6% on Friday, to end at 1143, also a four-month low and far below its key resistance level at 1150. The Nasdaq Composite lost 90 points, or 4.5%, this week, to end at 1909, a six-month low.

Even with all the doom and gloom, there's little talk of an impending oversold bounce. The trend remains assuredly to the downside.