The S&P 500′s slip below a key support level, at a time when the technical outlook is deteriorating, sets the index up for a test of the market’s 10-month long uptrend, according to Bank of America Merrill Lynch technical research analyst Stephen Suttmeier:
"If stocks fail that test, it could lead to a further drop of 5.5% to the bottom of a long-term support range, which would represent a 9.6% decline from last week’s record high.
The 1700 level is the bottom of a previous resistance range at the July and August highs. Falling below that level is technically significant, Mr. Suttmeier said, as it calls into question the validity of last week’s run up to record highs.
The S&P 500 is down 0.6% at 1700 in recent trading, just off an intraday low of 1697. The index has lost 1.5% since closing at an all-time high of 1725.52 on Sept. 18."
On Sept. 10th, I wrote about the 1685.75 level, which has been tested today.
I wouldn't complicate things too much here. We're still within a well defined trading range.
However, Suttmeier does bring up a good point, and it did feel like a blow off top on the Fed "no-taper" day.
Levels to watch and trade around: 1698 is the 9 dma and 1675 is the 50 dma.