When the NASDAQ failed to hold above 2,200 on August 4, I was concerned. The subsequent trading between 2,100 and 2,200 reflected the nervousness of a market uncommitted to taking it higher.

 The break below key technical support at 2,100 on September 22 and 23 was a warning flag. It showed the market's willingness to drive stocks lower.

 On October 5, another break below 2,100 surfaced, but unlike the breach in September, the NASDAQ has failed to rebound back to 2,100 for the last four straight days. The near-term sentiment is bearish, but now it is a question of whether it can hold at 2,000, last breached on May 17.

 So far, October is playing out as expected -- lots of volatility and apprehensive trading. In the seven sessions to October 11, the tech- laden NASDAQ has closed lower in five of the sessions with a net loss of 90.60 points. The NASDAQ is now down over 5% this year and is struggling to regain some lost momentum and positive sentiment. The daily advance-decline line has been below 1.0 in five of the seven sessions and 13 of the last 20 sessions dating back to September 14.

 The daily new-high/new-low ratio (NHNL) on the NASDAQ continues to be fragile. The NHNL ratio simply measures the number of stocks touching a new 52-week high versus the number of stocks that have declined to new 52-week lows. The theory is, in a bullish market, investors quickly bid up stocks, and you see a rising NHNL ratio. When investors get nervous, fewer new highs are made, and the NHNL ratio will tend to decline, giving you a warning. At the other end of the spectrum, bear markets have more new lows than new highs.

 Eighteen of the last 20 sessions have shown a NHNL reading of below 70%, and the last five sessions have fallen below 50%, including a dismal 22% reading on Tuesday. View this as a warning. The sluggishness of the NASDAQ over the last few weeks supports the weaker NHNL ratio. If it continues, we could see more weakness ahead for the NASDAQ. So monitor the ratio, and you should get a better feel for the market.

 There's no question that 2005 will not please investors.