To paraphrase Steve Martin's character in

The Jerk

: They rolled the ugliness today.

Amid a

sea of seamy revelations of more corporate malfeasance, U.S. stock proxies tumbled early and pierced erstwhile technical support levels with a late-session swoon.

The

Dow Jones Industrial Average

fell 2.2% to 9707.43, breaking definitively below its May 6 intraday low of 9807.69 in the process. The Dow fell below its May low intraday Thursday, but broader market averages held above theirs before an

afternoon reversal ensued. Today, the opposite occurred.

The

S&P 500

thrice bounced off the 1050 area intraday today (vs. its May 7 low of 1049.06), before succumbing in the final hour. The index closed down 2.5% to 1040.62, with selling accelerating after it breached the 1049 level at around 3:30 p.m. EDT. That selling, in turn, weighed on the

Nasdaq Composite

; after spending most of the session well above its May 7 intraday low of 1560.29, the Comp closed down 3.3% to 1562.38.

Like the Comp, the

Nasdaq 100 Unit Trust

(QQQ) - Get Report

closed just above its May low of 28.42, ending down 3.9% to 28.88 after trading as low as 28.79 intraday. The Nasdaq 100 Index fared relatively better, falling 4.1% to 1159.15 vs. its May 7 low of 1142.25. The closely watched Philadelphia Stock Exchange Semiconductor Index wasn't as fortunate, closing down 5.2% to 451.37 vs. its May low of 455.27. The SOX was hampered by traders' reaction to

Xilinx

(XLNX) - Get Report

, which said

sales would rise about 8% in the current quarter; apparently, some were expecting even more robust guidance as Xilinx shares felling 12.1%.

Meanwhile, the Russell 2000 fell 2.7% to 474.39, its lowest close since Feb. 28, and the S&P MidCap 400 fell 2.5% to 515.30, ending below its May 7 intraday low of 523.85. Today provided further evidence the era of

small-cap dominance is ending, at least temporarily.

Today's session showed how technical and fundamental analysis can converge with powerful results. The breaching of the aforementioned technical support levels was the cause of the market's final-hour swoon. But that development was preceded by daylong weakness in major indices, which was spurred by a string of developments that further convinced some investors the U.S. stock market is a hotbed of accounting shenanigans and villainous executives. These included:

The resignation of

Tyco's

(TYC)

CEO

Dennis Kozlowski amid charges he didn't pay personal state taxes. Tyco shares fell 26.9%;

Microsoft

(MSFT) - Get Report

shares falling 3% after the software giant settled a case with the

Securities and Exchange Commission

, which alleged the company improperly underrepresented its earnings;

Williams Cos.

(WMB) - Get Report

shares falling 22.9% amid

allegations, which the company denied, that it tried to corner the natural gas market in California and improperly accounted for power trades;

More tragically, less than a week after his company lowered guidance and cut half of its trading staff,

El Paso's

(EP)

treasurer, Charles Dana Rice, was found dead of an apparent suicide. It turned out Rice had serious health problems, but, to some, his death recalled that of

Enron

vice chairman's Clifford Baxter during that power trading firm's unraveling.

The fallout from the latest scandals and resultant technical breakdowns by major averages was further reflected in market internals. In

Big Board

trading, declining stocks led advancers by 3 to 1 while down volume totaled more than 88% of the 1.3 billion shares traded. In over-the-counter trading, losers led by 26 to 9 while down volume equaled 92% of the 1.44 billion shares exchanged. New 52-week highs led new lows 83 to 57 in NYSE trading while 52-week lows led highs 163 to 88 in over-the-counter action.

Among the few gainers today were defensive groups such as gold miners (which outpaced the metal's modest rise), REITs and the odd consumer staple such as

Procter & Gamble

(PG) - Get Report

. P&G was one of only two Dow stocks to end higher on the session (

AT&T

(T) - Get Report

being the other).

Weakness in equities spilled over into currency trading, where the dollar slid against major currencies, although it finished above last week's lows. The benchmark 10-year note rose 9/32 to 99 1/32, its yield falling to 5.01%, but any "flight to safety" trade into Treasuries was limited by the dollar's weakness plus stronger-than-expected reports on construction spending and the ISM's factory index, which also included a higher-than-expected prices-paid component.

Trader-Ex

Trader X got his comeuppance today, no doubt to the joy of those readers who've had the long knives out for our mysterious and stubbornly bullish source. (For background on Trader X, go

here.)

The Comp may have closed just

above

its May lows and

Applied Materials

(AMAT) - Get Report

may not have fallen below $22 on above-average volume (it was down 3.4% to $21.43 on

below average

volume -- 74% of the 30-day average, according to Baseline) which was Trader X's proverbial line in the sand -- but the combination was enough to knock him from my source list. Major averages and stocks such as AMAT are below levels they traded on May 9-10, when Trader X was imploring me to tell readers to "buy the dip." The bottom line is I (and, more especially, readers) am less forgiving of anonymous sources, especially those with incredible hubris.

Still, few readers seem to be aware of the irony of their own smugness and cockiness when it came to believing Trader X was wrong, and their rejoicing in his demise. Given that the Comp and NDX remained above their May lows today despite the rise in new 52-week lows, along with the Russell's weakness, could (

could

) suggest the period of big-cap tech outperformance Trader X forecast is forthcoming, if not already under way.

Finally, Trader X was far from alone in his bullishness. Richard Bernstein, chief U.S. strategist at Merrill Lynch, reported today that his "sell-side indicator" rose to 69.1% as of May 31 vs. 69% from the end of April. (The sell-side indicator is based on the recommended asset allocations of major Wall Street strategists -- including Bernstein -- and is designed to be a contrary indicator; for more on how it works, go

here.)

"We are truly amazed by this incremental bullishness. ... Wall Street strategists continue to believe that the current environment represents one of the best times to buy equities in the last 16 to 17 years," Bernstein wrote. "These data clearly show that there is no 'wall of worry' to which many point. Rather,

strategists appear to be burying their heads in the sand."

Ostrich meat is delicious and low in fat. The bears feasted on it again today.

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.