To say that Friday was an ugly day in the market would be an understatement. The Dow dropped 256 points, or almost 2% to close at 12,800. For the week the Dow was down 4.23%This is below its' August and November weekly closing lows of around 13,000. The Dow also closed decisively below its' 50-week moving average of 13,205. For the week the Dow was down 4.23%.

The S&P 500 outpaced the Dow's loss by falling 35 points, or almost 2.5% to close at 1,411 on Friday. For the week the S&P was down 4.52%. This is also below its' August and November weekly closing lows. Another sign indicating weakness is that the S&P 500 spent the entire week below its' 50-week moving average of 1,479. During the August sell off the 50-week moving average provided support for the index, but this doesn't seem to be the case this time.

The big loser on Friday was the Nasdaq, which fell 98 points for a 3.77% drubbing. This capped off a weekly loss of 6.35% to close at 2,504. This marks the first time the Nasdaq has closed below its' 50-week moving average since July 2006. The Nasdaq 100 fell even further. It was down a whopping 6.8% for the week.

The momentum stocks seemed to fall with everything else this week. Until now the four horsemen of the momentum crowd seemed to rise no matter what. that changed this week. Google's (GOOG) drop was in line with the Nasdaq as it fell 6.48%. Research in Motion (RIMM) got hammered for an 11.62% loss. Apple (AAPL) also fell further than the index losing 9.9%. Amazon (AMZN) held up slightly better and only lost 5.99%. I guess nobody has figured out this is a retail stock yet.

If the momentum crowd switches gears and starts shorting weakness instead of bidding things up to the sky, 2008 could get very ugly, very fast.

SunTzu