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Resetting the Sights -- Lower

NEW YORK -- It may take a tough man to make a

tender chicken. But it takes an even tougher man (or woman) to call a bottom for the

Nasdaq Composite

. Yet another final-hour collapse confounded the bottom seekers

Thursday.

Prior to the fade-out, market players were waxing optimistic about how the index remained above the intraday low of 3649.11 it hit

April 4 and that perhaps it was establishing a "higher low" than that nadir, signaling, maybe, that the selling had climaxed.

The Comp never revisited that level, but its final tally, down 92.85 to 3676.67, had technical types talking again about "retests" and "critical support," although the targets were shifted -- downward.

The magic level for the Nasdaq is now 3500, according to (among others) Scott Bleier, chief investment strategist at

Prime Charter

. The Comp climbed from roughly 2600 to 5200 on an intraday basis from its mid-October lows to mid-March highs, he noted. A bull market correction -- which, albeit severe, Bleier believes is occurring -- could be expected to shave up to two-thirds off the advance, which results in the 3500 target.

A close below that level for more than one day would mean the Nasdaq is

really

in a bear market, he said, calling the 20% demarcation meaningless, given the extent of the rally that preceded the "serious comeuppance."

Greg Nie, chief technical analyst at

First Union Securities

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in Chicago, also cited the critical significance of 3500, but for a slightly different reason. The technician dubbed 3500 a "small shelf of support" that's been intact since December. More importantly, it is just above the Comp's 200-day moving average.

"If that doesn't hold, it implies risk to 3000, but I don't think we have to go that route because the overall technical picture is not overwhelmingly bearish," he said, noting the

New York Stock Exchange

advance/decline has been improving (Thursday's negativity notwithstanding).

"Bottoms aren't made without pain and gnashing of teeth," said the head over-the-counter trader at one large Midwestern firm, eschewing technical analysis. "As wicked as it's been, I still haven't seen it like in the past. I'd like to see some panic in their eyes

Friday morning."

Unsolicited (I swear), the trader then turned to the subject of

market makers and their role (or not) in the action.

Because market makers have only a 100-share obligation and profit margins have been "going south," no one is going to risk buying more than 100 shares, the source said. Thus, liquidity has vanished for "secondary and tertiary" tech names, forcing people seeking to raise cash to sell household -- aka "more liquid" -- stocks. That, in turn, has market averages careening lower. (Did I mention the

Dow

shed 202 Thursday?)

Whereas the NYSE specialist remains in the driver's seat, the OTC market maker is just a participant in the game, he argued. "As such, I don't have an obligation to maintain a fair and orderly market and don't tell me I have to take more risk when there's no quid pro quo."

Cry not for the market makers -- who are making up for the declining profit margins with higher volumes (and then some). The intent here is to debunk the myth that market makers represent some vanguard against disorder and painful downturns -- as if the recent action hasn't already made that clear.

Sink or Strategize

With that (hopefully) indelibly imprinted on your psyche, I turn now to Frank Husic, managing partner of

Husic Capital Management

in San Francisco.

Given Husic's credentials as an avowed tech bull (as

reported here

previously), I figured it would be interesting to see how he's navigated the recent maelstrom.

Husic started raising cash in mid-March -- as much as 30% in his hedge fund portfolios -- not so much because of a bearish view but so as to have some money to invest. And -- I presume -- to lock in some first-quarter profits.

The fund manager sold some names he felt were not as strong and could become "orphans" in a market correction. Husic declined to specify but said most were recent IPOs, noting quality had declined to the point that the public was effectively in the role of venture capitalists.

Still, Husic admitted being taken aback at the extent of the selloff and -- with a chuckle -- regretted not raising more cash. Plus, he got sucked into the action at the beginning of a quarter that is usually a down time (relatively speaking) for hedge funds.

In recent days, the hedge fund manager added to current holdings in "names we feel confident in -- the ones we are convinced the results are going to be quite beyond people's expectations." Examples include

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

and

Broadcom

undefined

.

Additionally, AMD's emphasis about the strength of the flash memory market confirmed his confidence in current long positions

SanDisk

(SNDK)

and

Atmel

(ATML)

. He's looking to add new positions in the space but would not name names.

Husic also sees potential for wireless plays that have been crushed, such as

VoiceStream Wireless

(VSTR)

,

Leap Wireless

(LWIN)

and

Global Crossing

(GBLX)

. He is long all three.

Finally, he's comforted by the relative strength demonstrated recently by longs such as

Teradyne

(TER) - Get Teradyne, Inc. Report

and

Integrated Device Technologies

(IDTI) - Get Integrated Device Technology, Inc. Report

.

"I don't have total conviction" the market has bottomed, but "I have conviction in these companies down at these levels," Husic said. "I can't document the multiples aren't too high and won't come down but I have confidence in the fundamentals

and feel I can be safe buying more."

This is what passes for bullish these days.

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 welcomes your feedback at

taskmaster@thestreet.com .