It was a volatile day for the market on Thursday, but while the indices finished the day with sizable losses, they were able to close well above the lows of the day and hold on to a portion of the previous day’s gains. Following Wednesday’s big advance and despite a strong earnings report from AAPL (NSDQ: AAPL [1]) the previous evening, indications were for a bit of a soft start once the day got under way.

Unfortunately, however, the index futures lost more ground as we headed towards the opening bell after MSFT missed both top- and bottom-line estimates, confirmed that they would be cutting up to 5,000 jobs in the next 18 months, and withdrew guidance due to an uncertain economic environment. Meanwhile, sentiment soured further following the weekly jobless claims numbers which showed 589,000 new unemployment benefits claims last week, well above the 543,000 economists were anticipating, and 4.61 continuing claims, which was higher than estimates of 4.53 million and above last week’s reading of 4.51 million.

As such, the indices started the day by gapping lower once the opening bell rang. Although investors tried to stabilize the market as the day got underway, the indices quickly succumbed to the downward pressure, moving steadily to the downside for the remainder of the morning. However, despite the lack of any apparent catalyst other than the fact that the Dow reached what had been the intraday low from the previous two sessions (right around the 7950 level), stock abruptly changed directions and worked their way higher through the New York lunch hour.

The move to the upside, though, began to gain momentum, and as we worked into the afternoon just about every area of the market began to shoot higher, taking the averages to their best levels of the day a little less than two hours before the close. The arrival of the late-day troops, however, proved to be premature, as the indices gave up most of the ground they had just regained only to reverse yet again and squeeze higher right into the close.

When it was all said and done, the indices lost, on average, 1.85% on breadth that was a bearish 3:1 to the negative and volume that was higher on the Nasdaq but lower on the NYSE. While much calmed when compared to what we became used to towards the end of 2008, the action on Thursday was as wild as we’ve seen it so far this year. From a technical perspective, the indices have been able to hold right where they’ve needed to, and that, at least, is a positive. Still, we’re in a sticky spot. Like we’ve said, the action in the financials is extremely worrisome, and without that sector acting better, it’s going to be mighty difficult for the rest of the market to make much progress to the upside.

Perhaps this sort of action suits those with time-frames of mere hours, but the bottom line is that we are still far from having the sort of market conditions conducive to building longer-term positions.

Let’s go to the charts.

The Nasdaq took a hit during today's trade on increasing volume. The trading environment is staying choppy, but lows are holding as the index bounces around below its 50dma.

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The S&P 500 (INDEX: $SPX [3]) sank lower during today's session on decreasing volume. Overall, no major technical damage was done today, and the bulls continue to hold the index above support levels.

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The Russell 2000 (INDEX: $RUT [5]) moved lower during today's trade but is holding above recent lows. The action was poor, but the bulls were able to close the index off lows. We continue to trade with a cautious eye and are holding high levels of cash.