The S&P 500 is showing severe bearish divergence. Is a major crash coming? 1. S&P 500 Index $SPY The market has been stuck in a sideways grind for the past four to five months, with fake breakouts repeatedly slapping us in the face. We're now at the tail end of the cycle. Even though there's bearish divergence, it might still make one last desperate push for a new high. If the top is already in, the next move could be a steady drop toward the 690 moving average support level. In the short term, there’s a chance for an oversold bounce around the 754 measured target. 2. Nasdaq 100 ETF $QQQ Tech stocks are performing weaker than the broader market, and the downside potential hasn’t been fully realized yet. Keep an eye on the critical support level at 694. If it holds and rebounds, there’s a chance to push up toward 826. But if it breaks or the broader market tops out, it could slide all the way down to 650 to find support. 3. Russell 2000 Small-Cap Index $IWM Currently approaching the 1:1 measured target at 280. There’s a good chance we’ll see an oversold bounce play around this level in the near term. 4. Financial Sector $XLF Moving in sync with the main index, it has also dropped to the 1:1 measured target. In the short term, it’s searching for a point to stabilize and rebound. 5. Portfolio Strategy $PORTFOLIO In this choppy, back-and-forth “monkey market,” don’t be stubborn. Your portfolio needs a balanced offense and defense: allocate part to high-growth stocks for flexibility, and the other part to defensive sectors for protection and risk management.