Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Markets Breaking Down from their Rising Wedges

|Includes: Apple Inc. (AAPL), AMZN, BAC, BBRY, CSCO, DIA, GOOG, GS, IBM, INTC, JPM, MSFT, QQQ, SPY, TLT, V, VZ, XLF
First Published - Friday, August 6, 2010. The indices are breaking down from their rising wedges today as investors fear that a weak jobs market portends a double dip recession.  The yield on the 10-year bond ($TNX) fell a dramatic 3% breaking down from its triple bottoms to form fresh 4-month lows.  At these levels, the bond market is all but indicating that we're headed for a protracted deflationary environment.  The TLT rose three-quarters of one percent as the VXX, an ETF following the $VIX, rose 3%.  

Due to the nature of today's pull-back today, I think the July 1 to August rally is quickly coming to and end, and that we're in fact headed for another down leg in the markets perhaps to test the July 1 lows.  Rising wedges are generally bearish patterns, and when a stock or index breaks down from a rising wedge, the down leg that follows is generally steeper than the previous down leg.  So I think its very possible that we will test the July lows over the next 4 weeks.  The following are links to rising wedges on every major index: 

Dow Jones Industrial Average
stockcharts.com/h-sc/ui?s=$INDU&p=60...

The NASDAQ
stockcharts.com/h-sc/ui?s=$COMPQ&p=6...

The S&P 500 Index
stockcharts.com/h-sc/ui?s=$SPX&p=60&...

The NASDAQ-100 (QQQQ)
stockcharts.com/h-sc/ui?s=QQQQ&p=60&...

Disclosure: At the time of this writing, the author holds September $45.00 puts on the QQQQ. The information contained in this column is not to be taken as either an investment or trading recommendation, and serious traders or investors should consult with their own professional financial advisors before acting on any thoughts expressed in this publication.