QQQQs Trapped in Three-Stage Breakdown

This column was originally published on RealMoney on Sept. 26 at 12:30 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

The major indices completed a round trip to the August lows last week.

These price levels will provide support for a bounce that will retrace part of the decline, but this rally should fail and set up a trip to the July "London bombing" lows by mid-October.

While Hurricane Rita got most of the headlines last week, don't forget this selloff began as a response to Tuesday's rate increase. Indeed it looks like smart money is selling this market and will continue to do so in the fourth quarter. In reality, that began well before Greenspan and Co. decided to raise interest rates. ...