Stock proxies were down sharply Monday afternoon, making Friday's comeback look increasingly like an anomaly that didn't signal an end to the decline that began in earnest a week ago.

As of 2:38 p.m. EST, the Dow Jones Industrial Average was down 1.2% to 8543.55 after having traded as low as 8501.65. The S&P 500 was lower by 1.3% to 899.98 vs. its nadir of 895.41 and the Nasdaq Composite was down 2.7% to 1384.17 after having traded as low as 1378.70.

Notably, each of the major averages has traded below Friday's respective intraday lows, although only marginally so for the S&P and Dow. Nevertheless, there was little additional solace for those long shares at this juncture. Little solace, that is, beyond hopes that the decline is getting long in the tooth.

Following last Monday's intraday reversal, "typically what happens from such an inflection point is that you get a 5% to 7% downside correction before another rally attempt is due," observed Jeffrey Saut, chief equity strategist at Raymond James & Associates. Before another rally attempt, he estimated such a decline should take the Dow to the 8441 to 8622 range, where it is now ensconced.

In the anticipated subsequent rally, "the Dow either betters last Monday's reaction high of 9043, signaling more upside, or it fails to do so, indicating a more serious correction," is forthcoming, Saut wrote.

His belief that another rally attempt is pending is partly due to an expectation that Friday's resignations of Treasury Secretary Paul O'Neill and White House economics adviser Lawrence Lindsey mean "the government is going to spend a lot of money in an attempt to stimulate the economy."

The resignations also reinforced his view that there will be "no double-dip recession, a muted pickup in profits, a weaker dollar and a rise in the inflation rate." (The U.S. Dollar Index was lately down 0.05 to 105.33.)

Thus far, however, President Bush's nomination of CSX ( CSX) chairman John Snow as Treasury secretary was doing little to alleviate traders' concern about the course of the economy and the administration's policies.

Meanwhile, those who see parallels between the post-Oct. 9 rally and the one beginning in late September 2001 observed the following: Last year's fourth-quarter rally peaked on Dec. 6. The S&P 500 then fell more than 4% in the ensuing week before recovering in the final two weeks of December, peaking on Jan. 4 on a closing basis. The index then stumbled for the rest of January and into late February before rallying to within earshot of its January high on March 11, from which it proceeded to backtrack before coming unglued in mid-May.

Just something to think about as the post-Oct. 9 rally continues to follow a very similar track.

Slew of Negatives

Issues weighing on major proxies included IBM ( IBM), down 2.7% after a downgrade by Banc of America Securities, as well as Qualcomm ( QCOM), hit to the tune of 4.4% by a downgrade from Salomon Smith Barney. Both analysts cited valuation concerns, which also was the catalyst for a Morgan Stanley downgrade of the software sector.

That call was weighing on shares of Microsoft ( MSFT), Oracle ( ORCL) and Siebel ( SEBL), among others. The Merrill Lynch High-Tech 100 was lately down 3.3% and the Nasdaq 100 was off 4.2%.

Retailing stocks also were down sharply after Wal-Mart ( WMT), Federated ( FD) and several others issued disappointing weekly sales results. The S&P Retail Index was off 1.6%.

The weak retail sales data, and general weakness in equities, was benefiting Treasuries. The price of the benchmark 10-year note was lately up 10/32 to 99 20/32, its yield falling to 4.05%.

Meanwhile, Citigroup ( C) and J.P. Morgan ( JPM) were down sharply after news reports suggested they each helped Enron hide debt before the energy trading firm's implosion late last year. The Philadelphia Stock Exchange/KBW Bank Index was down 1.2%.

Speaking of bankruptcies, United Airlines' parent UAL ( UAL) filed for Chapter 11 Monday morning , the largest in the aviation sector's history. While widely expected, the news was putting additional pressure on the beleaguered airline sector as the Amex Airline Index was down 3.5%, although shares of UAL itself were up 18.3%.

On the macro front, traders were unsure what to make of the Iraqi government's 12,000-page disclosure on its weapons program over the weekend. Meanwhile, crude futures continue to climb amid rising concern about the geopolitical situation in Venezuela, where 11 of 21 tankers owned by the state oil company were idled by a strike. Crude futures were lately up 1.1% to $27.23 per barrel.

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.