With my "line in the sand" at S&P 1307 looking like it has an excellent chance to be broke on a closing price (4 PM) basis today (finally), I would offer the next level of support is the 100 day (exponential) moving average, which served as support in the mid March swoon. This number has creeped up from 1280 to 1281.5 the past few days so let's call it 1280ish.
Much as we had reflexive bounces off 1307 three days in a row last week, I would not be surprised to see a cursory bounce off 1280ish if and when we get there. It will be interesting to see how the market acts at that time, and if 1280 is broken, the lows of March in the 1240s come into play. The technical damage to the market would be quite severe in that outcome, but bulls would have a firm level to make upside bets against, as a potential 'double bottom' would be in place.
While I did say last week I thought we had more downside to go, saying it and playing it are very different things. The Friday rally, combined with the Pavlov dog "Monday morning gap up" would have had me not benefiting much from today's swoon, other than being in a defensive cash rich position due to the weakness in the market of late. One does not expect to walk in Monday morning to >1% drop in the current era. That said, one could put on some downside protection this morning using either S&P 1300 (tight) or S&P 1307 (loose) as stop out levels, aiming for the downside levels I mentioned above. But it's never really easy, even when the market goes in the direction you presume...
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