Fed

Chairman Alan Greenspan's testimony was today's dominant news event, as

discussed earlier. But many market participants remained focused on yesterday's turnaround, and the ongoing dissection of its cause and meaning.

Today's session is going to reinvigorate those who believe yesterday meant very little in terms of turning the tide on Wall Street, although midday indications suggested otherwise.

In another day of dramatic swings, the

Dow Jones Industrial Average

closed down 1.9% to 8473.11 after trading as high as 8635.66 and as low as 8406.45. Today marked the Dow's seventh-consecutive losing session, its longest losing streak since 1984.

Meanwhile, the

S&P 500

closed down 1.9% to 900.94 vs. its earlier best of 918.65 and low of 897.13. The

Nasdaq Composite

shed 0.5% to 1375.26 after trading as high as 1407.59.

In the absence of any obvious fundamental catalyst, traders turned to technical analysis to explain the market's afternoon fade. Rick Berry, an independent analyst who's made some

prescient calls in this column this year, suggested the Comp's failure to sustain a move above 1405 -- which represents the index's downtrend line from its highs this year -- was critical. (A similar downtrend line exists at 1000 for the Nasdsaq 100, which closed off 1% to 1011.30 today after trading as high as 1045.52.)

"I think Nasdaq's countertrend rally is over," Berry commented.

Nevertheless, there's a growing consensus, including among some who'd been previously bearish, that yesterday's reversal did augur better times ahead for equities.

Kevin Depew, a technical analyst at Dorsey Wright & Associates in Richmond, Va., said the bullish percentage indicators favored by the firm are getting closer to turning bullish. "Make no mistake, things can still get more painful and the

bullish percentage indicators are risk measurement tools, not magnitude indicators, so a continued slide could still bring enormous pain for those investors still long," Depew commented via email this morning. "But it's good to finally see these indicators slip closer to our 'Green Zone' area."

Faithful readers will recall that Depew foresaw

high risks for all stocks in early June and reiterated a defensive stance back on

June 18. (The bullish percentage indicator was created by A.W. Cohen in 1955 and is calculated by dividing the number of stocks trading with new point-and-figure "buy" signals by the total listed on a given exchange. Point-and-figure charts are pure price charts that plot supply and demand for a given stock or index, without factoring in time or volume.)

This afternoon's fade "doesn't change anything," Depew said shortly before the closing bell. "I see resistance at 1400 on Comp, but still plenty of room for a countertrend rally to materialize. In June, we were still a long way from a low. Now, we're closer to something tradeable and I see more setupsfor long trades than short trades in tech." (Conversely, he foresees a "comeuppance" for sectors such as real estate, banks and S&Ls.)

Specifically, Depew was optimistic about the Comp because the bullish percentage indicators on semiconductors reversed up on July 8, "indicating at least an oversold bounce in store for this beleaguered group." A similar pattern has more recently emerged in biotech stocks, he said.

Indeed, from its low on July 8 to today's intraday high of 407.62, the Philadelphia Stock Exchange Semiconductor Index rose about 9%. However, the SOX finished down 2.2% to 386.41 today. After the close

Intel

(INTC) - Get Report

reported second-quarter earnings of 9 cents per share, 2 cents below the consensus estimate.

The chip giant forecast its third-quarter revenue would be flat to slightly higher vs. the second quarter total of $6.32 billion, and that it plans to reduce its workforce by 5% by year-end.

Meanwhile, the AMEX Biotech Index rose more than 20% from its low on July 11 to today's intraday high of 332.09; the BTK ended up 3.9% to 318.74.

The recent strength in these groups -- concurrent with a steep rise in DRAM prices -- was on the mind of many observers who've argued the Comp's recent relative strength, which re-emerged today, is a sign the selling pressure is waning.

Conversely, bearish observers like Berry believe the very recent gains in those (still) richly valued sectors, and stocks such as

Microchip Technology

(MCHP) - Get Report

and

QLogic

(QLGC)

, is another sign speculation is alive and well. Or, at least, alive and kicking.

Don't Stop Thinking About Yesterday

As

reported yesterday, rumors circulated that the session's wild reversal was prompted by futures buying by the Federal Reserve, or someone operating on its bequest. Several readers emailed to attribute today's brief midday bounce to similar government machinations.

Nothing could be further from the truth, according to Fari Hamzei of Hamzei Analytics, a Los Angeles-based quantitative analytics firm that serves the institutional community.

Citing "high level" contacts at the Chicago Mercantile Exchange, Hamzei said yesterday's rally was spurred by a "straight outright purchase" (vs. a program buy) of S&P 500 futures by three institutional firms. He wouldn't name them but said they were of the pension fund and mutual fund variety vs. hedge funds or government entities.

Because of the size of the order -- 10,000 contracts -- he said floor dealers "panicked" and started covering their own shorts, which aided the bounce. That in turn caused more covering, and so on. In very quick order, this sparked the "mammoth moon shot" that was yesterday afternoon. (Dan Fitzpatrick noted Hamzei's observation in

RealMoney.com's

Columnist Conversation and I put in a follow-up call to the analyst.)

Hamzei said the buy orders came in with the S&P futures trading between 875 and 884.42, which represented the contract's "S3" yesterday -- or third tier of intraday support.

Given the buyers were not hedge funds -- "who can run in for a day and make lunch money" and get out -- yesterday's action represented a "major buy signal," the trader said. "Not

the

bottom, but a good, tradeable bottom."

Hamzei's theory is that because the buyers were "big boys" who can't (and don't) "turn on a dime," yesterday's intraday lows "are going to be defended" if and when the market revisits them. Today, S&P futures settled down 17.30 to 903.30. As of 5 p.m. EDT, S&P futures were trading down 1.60 to 901.70 in the Globex session.

After the close today, Hamzei expressed disappointment in the market's afternoon fade, which he attributed to worries about Intel's pending results. "But I think the signal yesterday is beyond one issue," he said, and was sticking with a long position in the

Nasdaq 100 Trust

(QQQ) - Get Report

.

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.