The S&P 500 was down 4 points, or 0.5%, at 802, dipping back below the key support level of 804; while the Dow Jones industrial average lost 27 points, or 0.4%, to 7,633; and the Nasdaq fell 12 points, or 0.8%, to 1,505.
In fact, the risk just ratcheted up a notch, with our Housing Bubble Bellwether Index tumbling sharply to break below the critical support level of last summer.
Even though stocks came into last week oversold and trading just above long-term support levels, they ended the week below these support levels and still "oversold".
Earlier in the week, the Russell 2000 broke below a critical support level at 740, and now the Dow Jones and S&P 500 are sitting right at their relative support levels.
"On Oct. 8, the stock dropped below an important support level," he says.
Finally, in the event of a further breakdown below that extreme support level, price will have confirmed a potential continuation of the overall downtrend that began in July 2008.
The Dow Jones Industrial Average dipped below 10,000, but recovered as investors sought support from the technical support level.
Breakdown: A price drop below a significant support level or out of a consolidation pattern.
A shift to more bearish bets could increase the selling pressure on the security, pushing it below key support levels.
Indicators like RSI and stochastics are unreliable right now due to the recent price drop, but the stock did fall below $48.41, the most recent and significant support level, and the next level to watch out for is $47.06.
