The SP500 returned to resistance at the median line that has been in control since the May high. The obvious outcome is a retest of the August low near the lower channel line. However, the obvious outcome is rarely the one that comes to pass. I suspect that the current decline may be part of a [b] wave. If so, the next move down will not make it to the August low, but rather somewhere in the 1120 to 1140 zone. Another possibility is a brief decline that does not take out Tuesday's low followed by a renewal of the rally. Either way, a move above the 8/31 high would negate any near-term bearish potential.
Keep in mind that IBD still has the market in rally mode, and the MACD is still positive. These factors alone call for caution on the short side. I am short the Qs from around this morning's open, but I will be looking to take profits quickly.