Bear Flag

Here's our bear flag, it's not unusual for there to be a retest of the bottom trendline once it's broken. However, a form of manipulation that would actually be bearish would be to run prices back into the bear flag, thus giving longs and shorts the impression it failed-it would benefit the market makers as well as stops are now lined up just above that lower trend line.

If they have the impression it failed, longs may re-enter or hold their positions, as the market goes lower, especially if they entered or added to longs, the worse their suffering and eventual selling become-which creates the snowball effect. Again, this all comes back to the "Judo Concept" which  Wall Street uses Joes (the little guys) momentum and conventional understanding of technical analysis against them to create opportunities and to move the market without using their (smart money) capital

3C in the SPY shows a small positive divergence just before the retracement, the IWM, QQQQ and DIA all look far worse (bearish). The Q's look the worst, they may lead the way down.

The more reliable (bigger picture) 5 min 3C on the SPY just put in a negative divergence.

Remember, indicators get whacky when they are inside consolidations zones and this bear flag lasted nearly 3 hours, so readings are not always the clearest until we clear the zone.