Cisco, Hewlett hit a downward trend

A second-quarter economic slowdown, brutal housing numbers, a Euro crisis and a flight into bonds has knocked the S&P 500 down more than 13 percent from its 2010 high, but many of its most influential members have already entered a full-blown bear market.

Cisco, Hewlett-Packard and Intel entered bear market territory this week, dropping more than 20 percent from their 52-week highs. Bank of America and Wells Fargo extended their total losses to more than 30 percent this week. Others losers this week, such as Exxon, Microsoft, and Google, are already mired in one.

We are "subdued because the large names which so affected the indices are not, we contend, going anywhere,” said Laszlo Birinyi, in his monthly Birinyi Associates commentary. "It’s tough to go forward when one-third of the market is an anchor."

Birinyi, who is still bullish on the market and economy over the long-term, lowered his 2010 S&P 500 target to 1225 from 1325, representing about a 10 percent gain for the year. Without these large caps performing going into the end of the year, sentiment is still too negative and time to short for a rally of any more than that, he said.

Hewlett-Packard fell this week as it traded blows with Dell in an aggressive bidding war for data storage company 3-Par. H-P just upped Dell’s latest offer for the company today. Also, the government revised its second quarter economic growth figures down to just a 1.6 percent annual rate, from a 2.4 reading previously reported. Stocks still managed to rally into the green today, however.

"So many folks focus on the charts breaking down, while I focus on how cheap these are,” said Jon Najarian, co-founder of TradeMonster.com and a ‘Fast Money’ trader. “Exxon, Cisco, JPMorgan and Wells Fargo will outperform in the next four months into year-end and I am far more comfortable owning them when others shun them."

Others may share Najarian’s contrarian view. Intel’s stock reversed and moved higher today even after the company cut its forecast for the quarter.

"Intel is a huge and positive ‘tell’ that it is trading higher on lower guidance,” said Doug Kass of Seabreeze Partners Management. “Remember, it’s how stocks react to negative news that is more important than the news itself."

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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team