Overview of past week for the S&P500 - bearish outlook

Needless to say articles calling the tipping point here and here were dead-on.  Over the past couple of months since August decline it was all to clear that this was a period of consolidation before another push to the downside, and this push is gaining steam.  From the time I have spent looking at charts, I have never seen what many of the perm-bulls were expecting.  A Massive drop in august and then magically a regaining on confidence in the system resulting in a buying back to yearly highs.  There is on caveat...  QE3... This appears to be off the table right now, but you can easily foresee S&P500 at below 1000 as a signal to the FED that the market needs more money pumping. Again, this market is strictly controlled by central banks at this stage, if they ease it will go up, if they signal a halting to easing (not even tightening) the market will meet the reality of price discovery.

October I don't think will disappoint the crowd that fears this time of year based on historic data (ie crash of 1929, and many others).  The first day of October is listed here on a 5-min intraday chart.

Using the SPY as a proxy for volume, we can see that this market ended at the lows of the day on substantial volume. This market also closed below a key level that has been a battle ground throughout Aug-Sept 2011 as well as key resistance in the early part of 2010.  The level was 1120, some commentary about this battle can be found at: Once Again The Battle For SPX 1120 Is Raging

Lets take a step back and look at the daily chart from March until now.

From any technicians perspective this chart is broken.  We are heading into an area of consolidation which occurred in early 2010 which may provide some support but this market getting to 1040 in relative short order is becoming every more likely.

One technical indicator that I think is important to note is the MACD.  There has been a failure to reach the 0 (neutral) level, and the momentum has rolled back down to the bear side, setting the stage for a rough week ahead. 

The S&P500 has decisively broke out of the consolidation range over the course of September.  And a similar move to August could be in the works.  Eurozone failing to react, weak US financials, poor world  economic data all point to a deep recession in the short - mid term.  But remember the caveat ... QE3 (probably valued at $1 trillion +) will of course cause this picture to be voided but all we can do now is wait and see how governments, investors, corporations will respond to this new phase.