Subprime Drama Sinks Stocks

"I don't see how the market is making a low if [QID] is ready to rally," he says. "If we were at a bottom, QID would be topping. It doesn't look like it."

The QID, which returns twice the opposite performance of the Nasdaq 100, rose 4% on Tuesday.

Speaking of tech stocks: Lost in the subprime shuffle was the market's dour reaction to Texas Instruments' (TXN Quote) midquarter update late Monday. For the sin of merely narrowing its EPS and revenue guidance ranges, rather than raising the upper end, Texas saw its shares punished to the tune of 2.6%. Separately, Marvell Technology (MRVL Quote) shed 5.4% after a UBS downgrade, and the Philadelphia Stock Exchange Semiconductor Index lost 1.7%.

Notably, it was just Friday that the chip stocks were notably strong even as the broader market was flat. In this regard, Friday reminded me of the action on Feb. 22, as I noted on Saturday.

In hindsight, both Friday's session and Feb. 22 were harbingers of big declines. The lesson being: The chips are no longer leaders and may actually be a contrary indicator. For certain, be wary if the chips show strength in a vacuum.