Up 500 points one day, down 500 the next. That's the way the market is these days.

On Wednesday, the Dow Jones Industrial Average ($INDU) plummeted 520 points, erasing all of Tuesday's gains from the Federal Reserve's decision to keep short-term interest rates near zero.

At Wednesday's close, the Dow had lost 2,000 points, or more than 15% of its value, since July 21. The Standard & Poor's 500 Index ($INX) and Nasdaq Composite Index ($COMPX) indexes lost slightly more during that time. All three were perilously close to the 20% decline from the late April-early May top that many pundits (particularly in the media) use as a rule of thumb to determine a bear market. On Thursday and Friday, we saw a rebound.

But unfortunately, I think stocks have still lower to go. How low? Later in this column I'll tell you what some respected technical analysts think. But let's start with the fundamentals.

No solace on the economy

First, the economy. Need I say more? Jobless figures were somewhat better in June, but economists have revised downward their estimates of growth in the gross domestic product. Measures of consumer confidence are pretty weak.

And did anybody get the real message the Federal Open Market Committee put out Tuesday? The economy is so sick that the Fed is willing to guarantee exceptionally low rates for two years! I've never seen the Fed telegraph its moves so far in advance, and the FOMC's statement said over and over again how lousy the economy is.

Meanwhile, the open rebellion by three voting FOMC members makes it highly unlikely we're going to see another round of quantitative easing anywhere near as big as the last two.

Third, there's the debt crisis. Everyone agrees the European Union just doesn't have the money to bail out Italy and Spain, its third- and fourth-largest economies, if it comes to that. Rumors are swirling about the health of French banks and the safety of France's AAA rating.

And the debt-ceiling standoff here, which culminated in S&P downgrading the US's AAA credit rating, means more government action to "fix" the economy is likely off the table.

So there's no way President Barack Obama will get much additional stimulus. He's desperately trying to extend unemployment benefits and the payroll tax holiday, but those moves look pretty iffy at best.

Finally, there are earnings, which have been great. But we're getting much later in the cycle, and their momentum appears to be slowing. It's hard for me to see how earnings growth alone is going to power the market much higher when everything else appears to be going in the opposite direction.

And while valuations are looking attractive by some measures, they don't exist in a vacuum, either.

So, how low will it go?

So, where does that leave us? Four prominent technical analysts I contacted all agreed: Stocks are heading lower, likely into a new bear market.

David Sneddon, the head of technical analysis research at Credit Suisse in London, said the 1,370.58 intraday high in the S&P we saw on May 2 was the likely top. There's critical technical support around 1,100, which is just about the point the market rebounded this week. So far, we seem to be holding that.

The next level of technical support below that is at 1,020 to 1,022. "You'd have to get below (1,000 to 1,010) to have a genuine bear market," he said.

Another London-based technician, Sandy Jadeja of City Index, who watches the Dow, thinks that's where we're going.