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.

A few weeks ago, he predicted the Dow would drop to 10,428, which it did. Now, he told me by email, "the rally that follows will be brief, and then lead to another leg down to 9,673 and further."

"Lows are not to be expected until 2012," he concluded. "Next month is critical. If we break the low of August in September, there is worse to come."

Mark Arbeter, the chief technical analyst of Standard & Poor's, said back in May and June that the bull market was probably over, as I reported in this column. He hasn't changed his position.

By email, he said he "would look for some stabilization and a potential short-term rally now that the S&P 500 has fallen into a major zone of chart support . . . between 1,023 and 1,128."

Ultimately he thinks the S&P could fall to 1,020, or maybe as low as 935. That would be 15% below Wednesday's close, and would definitely mark a new bear market.

Michael Kahn, who writes the Getting Technical column for Barrons.com (subscription required) and the Quick Takes Pro blog, has long argued we're in a secular (long-term) bear market, and he thinks the cyclical bull is over, too. Like Arbeter, he sees 1,010 to 1,050 as the next level of support for the S&P, and below that, 930.

"I think it stops at 930 to make the 2000s-2010s follow the 1970s very closely," he wrote me by email. That's one decade for which investors have little nostalgia.

The technicians are unanimous that stocks are going lower, though some are looking for a strong rally that goes against the bearish trend. Arbeter doesn't expect that rally to go much beyond 1,250 to 1,260 before it sells off again. Sneddon thinks it won't bounce much higher than 1,200.

"We've clearly seen a lot of technical damage done in a lot of markets," he told me. "I would be personally (inclined) rather to lighten up and reduce my positions" on rallies.

That would be my position, too, if I hadn't already taken profits and sold what I wanted to a couple of months ago.

Beware if you're buying

If you missed that chance, I wouldn't sell in panic now, but would wait for stocks to mount a rebound to sell off positions in riskier small-cap stocks (which already may be in a bear market) and emerging markets, whose time in the sun has come and gone. That also may be a good time to permanently reduce your exposure to equities.

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But I certainly wouldn't buy into a market like this with all its wicked swings and uncertainties. Even mighty Goldman Sachs Group (GS, news) lost money on 15 trading days in the second quarter! And John Paulson, the hedge-fund genius who masterminded "the greatest trade ever" by shorting subprime mortgages, has lost 31% so far this year in his largest fund.

If people who have the best information and technology are losing money in this market, do you really think you're going to beat them at their own game?

There will be a time to buy again, but it's not now. This market is heading lower.

Howard R. Gold is editor at large for MoneyShow.com and a columnist with MarketWatch. You can read more of his commentary here. He blogs about politics here.