"Bottom line, the bear market is back in all the major averages," says Steven Hochberg, editor of The Elliott Wave Financial Forecast. Here's his technical guidelines for the key indices.

"The Dow saw a big reversal from another failed key trendline test at its May 2nd high. We previously forecast that if the index vaulted above its resistance lines on expanding breadth and increasing volume, that would be a bullish sign.

"However, volume continued to decline as the high approached and the NYSE cumulative advance/decline lin showed a clear loss of internatinal strength as breadth continued to contract.

"Technically, breadth deteriorated further, and the NYSE cumulative total actually broke through the bottom of a narrowing trangle.

"This is a key break that shows the characteristic negative breadth of a third wave decline is grabbing hold. As wave 3 accelerates lower, the declines should swamp advances, exceeding the extreme set last November.

"A move through the 12,750 area, a resistance level that includes the peaks of February 1 and 27 and April 7 as well as the May 9 low, is critically important. The comparable May 9 lows in the S&P, 1384, NASDAQ Composite, 2429, and NASDAQ 100, 1947, have yet to fall. Once they do, the race to much lower levels should be on.

"The next key downside test will come at the April 15 low, which is 12,269.8 in the Dow (1324.35 in the S&P, 2266.2 in the Composite and 1776.5 in the NASDAQ 100). A decline to this level in the Dow will be a .618 retracement of the rise through May 2-19.

"Once this low is out of the way, the dip-buyers will suddenly realize that they are close to losing all of their 'once-in-lifetime' gains and the selling will begin in earnest.

"The S&P 500 also stalled out after breaking though a previous fourth wave. Its quick reversal took out the rising trendline under wave (1) and brought it to rest just above another declining trendline that rides down on top of its October and wave 2 peaks.

"This level should give way soon and give rise to the assault on the key resistance levels cited above. It would take a rise through Monday’s peak at 1440 to alter this forecast.

"The NASDAQ 100's  momentum profile is already starting to resemble the downside look that it sported last November, the most powerful part of wave (1) down. In other words, the downside snowball is doing exactly what it is supposed to do in a third wave, accelerating.

"In the Composite, the resistance provided by the 200-day moving average and a preceding fourth wave of wave 3 down proved formidable. It will take a rise back through the wave C of (2) high at 2551.4 (2050.79 in the NASDAQ 100) to force a recount of this wave structure."