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SPY - Bearish Case Reviewed

|Includes: DIA, QQQ, SPDR S&P 500 Trust ETF (SPY)

It is not rocket science. The bulls could reverse all the good progress the bears have made over the last couple of weeks, but the technicals are the technicals and they have flat out sucked for quite some time now. I am talking about well before the recent top (of whatever magnitude) became readily apparent.

It appears that our previous look at the correlation of the new high into October 2007 and the new high into April 2010 - both with negative divergence by MACD - will prove fruitful. Add in data points like the achieved measured target off of the inverted head & shoulders built during Armageddon '08 and the case is firmer still.

Finally, there is all that overhead resistance the market has had to deal with. Do you remember just how strong and how pervasive negative sentiment was back in late '08, early '09? Hmm? Well, that has translated into a solid wall of resistance for the broad market SPY along with many other global markets. At the very least this has argued for a cautious stance for quite some time now, especially when factoring in the extremely unhealthy sponsorship this market has 'enjoyed' for months now.

Disclosure: Short the SPY vs. gold stock longs