A tug-of-war between bulls and bears lasted into the close of trading on Wall Street, leaving the major indices mixed and little changed on the session. Catalysts for profit-taking came as oil prices flirted with new highs and Time Warner ( TWX) missed earnings estimates.

Ultimately, crude oil settled down $1.03 to $60.86, after briefly surpassing its intraday high of $62.30, and buyers fought back. The Dow Jones Industrial Average finished up 13.85 points, or 0.13%, at 10,697.59, and the S&P 500 gained 0.92 points, or 0.07%, to 1245.04.

The Nasdaq Composite still finished in the red, down 1.34 points, or 1.34%, to 2216.81, led lower by semiconductor issues. Morgan Stanley downgraded National Semiconductor ( NSM) after the stock hit the brokerage's $25 price target. The Philadelphia Stock Exchange Semiconductor Sector Index finished down 0.29%.

Other tech stocks, such as RealNetworks ( RNWK - Get Report), up 8%, and BMC Software ( BMC), up 7%, gained on positive earnings news and outlooks.

But it was mostly up to Mister Softee, aka Microsoft ( MSFT - Get Report), to break with tradition and provide some excitement in tech. Microsoft shares rose 1.06%, after a 2.0% gain Tuesday, on volume of 138 million shares -- by far the largest on the Nasdaq -- amid persistent rumors that the software will raise its dividend.

That was the action in Wednesday's market that made the most sense to Jack Ablin, chief investment officer at Harris Trust. He likes quality-dividend stocks, but he's been feeling lonely lately, as the market has continued to pile into more risky bets in tech, consumer discretionary, and generally cyclical stocks. He's accepted the current market trend and remains "comfortably neutral" given decent stock valuations.

"But the market is misguided. It's seeing economic growth and drawing conclusions for profits. Techs are rallying in the face of higher energy prices -- those two sectors are natural arch-enemies. And we also know that the Fed is going to continue weighing on housing and will do everything to cool down consumption. Putting money on growth over the next 12 months is not the way to bet," he says.

Still, as John Maynard Keynes once said, "markets can remain irrational longer than you can remain solvent." In this market, where declining profit trends and rising oil prices have done nothing to discourage buyers, irrationality is in the eye of the beholder.

At these overbought levels in stocks, nervousness is becoming palpable with every downside miss. According to Marc Pado, market strategist with Cantor Fitzgerald, the major indices are trying to form "a top" before heding lower. The S&P 500, Nasdaq and Russell 2000 indices all breached either four-year or all-time highs (for the Russell) and are now trying to consolidate these levels.

There isn't much in the way of new fuel in the pipeline. "Earnings are fading through until next week, decent economic data cannot continue carrying the same weight, so we're basically still in that top-building phase," Pado says.

And on Wednesday, the key economic report -- the Institute for Supply Management's nonmanufacturing index -- came in slightly below expectations.

Besides fundamentals, the strategist uses a blend of technical and historic indicators to determine market trends. "We haven't broken yet, but I'm getting enough indicators telling me that we're in the process of a top, that will ultimately lead to that downside," he says.

Technically, he's noted that so-called "momentum indicators" like stochastics charts are showing signs of weakness, even as the market has headed higher.

Historically, the market has entered the late-July to mid-August phase when tops are formed, preceding "substantial" downside of around 7%, he says.

The logic behind this historical pattern is that September is the month when many funds end their fiscal year. Ahead of this, bonus-hungry portfolio managers will unload any underperforming stocks en masse. But over the past 15 years, the broad market has caught up to the trend, and investors have tried to anticipate the downside. So selling has become more and more pronounced in August.

Even if we haven't reached that phase just yet, Pado recommends using defensive strategies at this point, either by aggressively taking profits or putting stop-loss orders on many positions.

To view Gregg Greenberg's video take on today's market, click here .

In keeping with TSC's editorial policy, Godt doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback; click here to send him an email.