CINCINNATI (MarketWatch) - As the second-quarter earnings season takes shape, the U.S. markets are on the defensive.
And not coincidentally, this week's downdraft follows a failed test of significant technical resistance, arguably contributing to the bearish market bias, as detailed below.
The S&P 500's hourly chart details the past three weeks.
As illustrated, the S&P has failed a test of its 50-day moving average, plunging to retest the flash-crash low this week.

And not surprisingly, the S&P 500's wider view remains bearish.
In its case:
- The 50-day moving average currently holds at 1,089.
- The 200-day moving average rests at 1,112.
Against this backdrop, the S&P topped three straight sessions at 1,099 last week, leading to this week's downturn.
The bigger picture As the second-quarter earnings season takes shape, the U.S. markets are on the defensive.
And not coincidentally, this week's downdraft follows a failed test of significant
technical resistance, arguably contributing to the bearish market bias.
The SPDR Trust S&P 500's /quotes spy (
SPY 109.19,
+0.71,
+0.65%) six-month view highlights the bearish longer-term backdrop.
As illustrated, the blue arrows point to July's two strongest-volume sessions, and notably, both days marked sharp downdrafts.
Specifically, the July 1 session designated the 2010 low, while the July 16 session marked a failed test of the downtrend.
By comparison, the intervening rally attempt - between the blue arrows - came on lighter volume (including this year's two lightest-volume sessions), indicating that bearish momentum continues to set the market tone.
