Stocks gave up all of Monday’s gains and more yesterday as the focus continues to be on Europe’s inability to put together a rescue plan.

And it didn’t help the bulls that corporate earnings from 3M (NYSE:MMM) fell short of analysts’ expectations by a wide margin, and Amazon (NASDAQ:AMZN) was getting hit after the bell for missing its quarterly estimate of both earnings and revenues. Netflix (NASDAQ:NFLX) was pummeled, falling $41.47, or 35%, to $77.37 as management struggled to undo a massive loss of investor and customer loyalty.

It was a nasty dose of reality for the optimists as volume picked up to more than 1 billion shares and decliners outnumbered advancers by over 5-to-1.

Undoubtedly, the Europeans will try to repair the damage done by cancelling the meeting of the Finance ministers. The latest spin is that the summit meetings with the major heads of state still will be held, so nothing was lost. Therefore, we might see another rally and test of the 200-day moving average of the major indices. But the technical damage from yesterday’s reversals speaks for itself.

The Dow turned away from its 200-day moving average at 11,925. Support is at the old breakout line at 11,650, just 56 points from yesterday’s weak close.

The S&P 500’s chart is weakest of all. The S&P 500 failed to reach its 200-day moving average and yesterday reversed back into the old resistance, now support zone, at 1,220 to 1,230. Its next support line after that is the 50-day moving average.

The Nasdaq’s chart is strongest of the three, as it still is maintaining an intermediate uptrend. But its stochastic is on a “sell” signal along with the other major indices.

Conclusion: The market’s “recovery” is in danger of collapse. Only a powerful rally that closes above the respective 200-day moving averages of the indices could salvage a market that has run out of fuel. Sell into a rally and short-sell the technology sector that is loaded with high-priced stocks. For other trades in the meantime, click here.