The troubling pattern of stocks faltering in the final hour re-emerged today. The resulting losses were minor for stock proxies but major in terms of their effect on traders' psychology.

The late-day selling "shows you there's no confidence of any traders, none at all," said Mark Donahoe, head of sales trading at U.S. Bancorp Piper Jaffray in Minneapolis. "You're not going to get anyone who's going to hold a position in stuff for very long -- there are too many time bombs."

Of course, there were some individual time bombs today but little company-specific news that was moving the market. It was more like continued weakness in big-cap names that have disappointed investors of late, including

ExxonMobil

(XOM) - Get Report

,

Microsoft

(MSFT) - Get Report

and

Micron Technology

(MU) - Get Report

.

That kind of action -- often compared with Chinese water torture -- is perhaps more damaging to traders' psyches than a broad selloff.

"The low volume is more discouraging to us from a trading/execution end," said Bob Basel, director of listed trading a Salomon Smith Barney. "From the perspective of investors, people are resigned to the fact the market is going to severely test

Dow 10,000 -- what happens from there is where people take their cues."

After trading as high as 10,163.42, the

Dow Jones Industrial Average

closed down 0.6% to 10,027.66. The

S&P 500

fell 0.7% to 1093.14 after trading as high as 1108.46, while the

Nasdaq Composite

shed 1% to 1713.34 vs. its intraday best of 1746.52.

If broader averages are any indication, the Dow won't fare well if and when it tests 10,000. Just as the Comp breached support at 1724 yesterday, the S&P 500 tumbled through 1100 today, a level many technical analysts were watching closely.

"Maybe what we're looking at is

that not holding

S&P 1100 is a negative and the next big step is 10,000 on the Dow," Basel said, conceding the Dow is "more perception than reality."

Of course, some see reasons to be optimistic in signs of rising pessimism. The Chicago Board Options Exchange's put/call ratio rose above 0.90 today while the VIX rose 2.5% to 22.68 after spending much of the day in negative territory.

Elsewhere,

Investors Intelligence

reported that financial advisers who are bullish fell to 52.7% from 54.8% for the week ended April 19, while bearish sentiment rose to 30.1% from 28.4%. Those expecting a market correction rose to 17.2% from 16.5%.

But, paradoxically, the myriad investors looking to make the contrarian bet on rising pessimism may be forestalling the onset of any sustainable rally.

Walk the Thin Line

The day's economic news provided little fodder for the bulls, although major averages were higher until late in the day, so economic data didn't have an overtly negative effect.

As

reported earlier, new-home sales in March were lower than expected, although results for January and February were revised upward. The

Federal Reserve's

beige book was more optimistic, with all 12 districts reporting "signs of improvement." However, plans by businesses to invest in machinery and equipment "remained limited," a result foreshadowed by the earlier release of the durable goods report.

March durable goods orders fell 0.6% vs. expectations for a 0.5% rise. Excluding defense, March durable goods orders fell 1.2%. Although February's durable goods were revised upward to a gain of 2.7% from 1.8% previously, the March report was unambiguously damaging to the "robust recovery" scenario.

Nondefense capital goods orders fell 2.8% last month, pointing to continued lackluster spending by business. Also, computer orders fell 3.3% and communications-equipment orders dropped 14.6%.

"While manufacturers continue to rebuild inventories to support solidconsumer spending, the weakness in business investment indicators in recent months is notable," Peter Kretzmer, senior economist with Banc of America Securities, commented (with a degree of understatement).

As with the March

jobs report, some economists attempted to put as positive a spin as possible on the durable goods report.

"Bottom line: recovery

is not strong enough to justify the credit market expectations of Fed tightening in June," commented John Silvia, an economist at Wachovia Securities in Charlotte, N.C. "We continue to walk the fine line between boom and double dip."

Certainly, the data lessen the possibility of Fed tightening, which is presumably positive for equities. But it's a stretch to say the economy is walking a fine line between boom and double dip -- between

recovery

and double dip, maybe.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.