Of wedges, Fibonacci, cycles and trendlines: Equities show weakness presaged by recent negative divergence

During the day I posted and tweeted about a possible ending diagonal wedge or channel, and that it needed to retain trendline support at SPX 1095 to stay on track for another poke higher tomorrow. Well it lost that level, so if you were active intraday I hope you were paying attention! On larger timeframe trendlines, it may still have some support, but I don't know that we can rely on that to bring more than a wave 2 up (lower high, in swing trade terms). Now the game is to see if it gets that support, or confirms a more bearish scenario of being done already. And there's that Bradley model cycle date tomorrow - and guess what, sometimes turn dates actually gave a time window, which can be up to several days especially for cycles on such bigger time frames.

The QQQQ fell from hovering above that $43.30 level, their 61.8% retrace back to the 2007 high. What about the SPX having a rendezvous with 1109/1112, or the Dow Jones Industrial Average with 10,500? Well, I've speculated in posts here that just maybe they won't get there - for no good reason, other than that so many people are expecting it. Remember when everyone expected the bearish head-and-shoulders pattern to play out back in June and July? Could that same mass psychology cause the SPX and DJIA to fall short of their 50% retrace levels?

Well we don't really want to speculate too much, let the charts speak for themselves. We know there's been serious negative divergence cropping up, and warnings from technicians we respect including Andre Gratian, Tony Caldaro, and Terry Laundry, and no doubt others. Cautious traders should look for followthrough in terms of breaking a bit lower, with selling volumes and all that.

Probably the best point I can make now is, what to expect once the trend change is confirmed? Do you think it's going to make a great buying opportunity?! Please folks, let's position defensively - or in cash - because there are very good reasons to see the markets break down. It can possibly happen fast so please treat it with respect (or fear - a little fear can be okay for a downtrending market!). Some pundits will try selling "defensive sectors" - hey, even those stocks can go down! So even if you think you're smart enough to pick stocks that can go up when all else trends down - okay, maybe you are - don't abandon normal rules like protective stops.

If today's last hour of trade was just a wave 3 of 1 going down, it gives you a taste of even bigger drops that can be around the corner. Okay, I know we haven't confirmed the entire bear-market B-wave rally is completely over. But it can be - for real, now. So I'm crying "wolf" and the wolf may actually be at the door - so please be positioned carefully!