I am relatively surprised with the relative bearish ferociousness that is occurring in many high-flying technology stocks and the broader indexes at the moment. Let’s take a closer look.

We expect prices to move in relatively stable and tradable “swings” in terms of action/counter-reaction, buying impulse/selling counter-impulse in a seemingly perceivable rhythm.

It’s when this “push/pull” rhythm tilts so far to one side that “dislocations” or forced resolutions occur suddenly and often without major warning.

I, along with many others, have been writing about the overextended conditions and the amazing up-swings (actually, powerful sustained upward action) in major technology stocks like RIMM, AAPL, GOOG and others.

This week, it all is coming crashing down with amazing force.

Let’s look and then discuss some ideas (today’s last bar uses intraday readings):

Cisco (CSCO):

There appeared to be a ‘topping pattern’ and potential head and shoulders along with declining momentum through the months of September and October, which should have allowed nimble swing traders and profitable position traders to exit safely.

The problem occurred with the final “last breath” rally in late October and early November. The volume was high and I’m sure emotions were higher. Cicso actually lagged the recent moves in Apple and Google but suffered quite a decline recently.

Google (GOOG):

This is a case of “the greater the move, the harder the fall.” Google has been known to make multi-point moves in a day and Thursday’s action was no exception. Google has experienced a violent sell swing from above $740 to $660 within three days.

Apple (AAPL):

Apple’s recent losses take us back to mid-October, which isn’t so bad, but the problem is the potentially completed exhaustion gap which has formed and trapped all longs who bought following the gap.

Apple still could find support at the rising 50 period moving average, and could – in theory – find support just below the recent gap (as it has been filled), but I probably wouldn’t press my luck if I were holding the bag in this stock right now. Exit if price violates $165.

Baidu.com (BIDU):

This stock really doesn’t look that bad, as the most recent sustained upswing of two weeks was erased in a few days, but then you realize that the most recent sell swing took price down about $100. That is overwhelming.

The Nasdaq Index:

Let’s put all the action into context, and view the NASDAQ Index.

A two-month momentum divergence forecast bearish clouds on the horizon, and the formation of the triangle or wedge consolidation pattern forecast some sort of breakout was imminent. Unfortunately, the break was to the downside.

One had to ask, “How much more buying pressure was left to push high-flying technology stocks higher?” There were also breadth divergences evident in the indexes, as fewer and fewer stocks were making new highs. It just so happened that the ones that were doing so carried more weight on the respective index.

Take time this weekend to run through as many charts as you possibly can and personally annotate them with your observations. This week has the potential to be a great educational lesson if you’re willing to document, print off charts, and catalog your observations of recent price behavior.

Be safe!