Market technicians are following key levels for S&P 500 after stock market's first big drop in months As the stock market faces its first major test in the era of President Donald Trump , technical analysts are looking at several key levels to determine whether equities are holding it together or about to unravel. Here are some of the key points in assets they are examining over the next several days and weeks after the Dow Jones Industrial Average , the S&P 500 index and the Nasdaq Composite Index suffered their worst daily loss in months on Tuesday. Read: Get ready for Trump Trade 2.0--a 'deeper pullback' for stocks (http://www.marketwatch.com/story/get-ready-for-trump-trade-20-a-deeper-pullback-for-stocks-2017-03-22) Jonathan Krinsky , chief market technician at MKM Partners , said he is looking at the 50-day moving average for the S&P 500 at 2,326, which would represent another 1% drop for the broad-market benchmark, which finished Tuesday trade at 2,344. Technical analysts often look at so-called moving averages to help determine if a recent trend, bullish or bearish, is intact. "The 50 DMA has not been tested since just after the election. We would look for the initial test of the 50 DMA to be buyable," Krinsky said to MarketWatch. Krinsky sees so-called resistance at the 2,360-2,370 level for the S&P 500 (see chart below). Resistance typically represents a level that an asset finds hard to break above due to any number of factors, including traders making bearish bets against that target. Katie Stockton , chief technical analyst at BTIG, is looking for support for the broad-market S&P 500 at 2,280 based on a so-called Fibonacci retracement. Fibonacci retracements, named after the 12th century Italian mathematician, are based on the ratio of 0.618, also known as the "divine proportion." The proportion, which has been found to exist in nature for technical wonks, is viewed as signifying the natural movement of Wall Street assets for chartists. Still, Stockton views the overall uptrend for the market as mostly holding together: "Long-term momentum remains positive, and within that context we think a bullish bias is appropriate, noting also the pullback follows abundant breakouts," she told MarketWatch. "As long as the pullback does not give way to abundant breakdowns, which would mean a significant loss of market breadth, I would assume it's countertrend," she said. Frank Cappelleri , executive director at Instinet LLC , told MarketWatch that "yesterday's decline was damaging for various reasons, and while one day doesn't represent a trend, the selloff did push many indices, ETFs and stocks either back to or below some key levels." Cappelleri said he is looking for 20,385 in the Dow industrials, which closed on Tuesday at 20,668 and said a fall below 20,000 would be a bearish sign for the blue-chip gauge, given recent focus of the key milestone level. For technical analyst Tom McClellan , it's all about crude-oil prices, which have been known to correlate positively with equity markets during certain periods. West Texas Intermediate crude oil for May delivery --the benchmark U.S. contract--has fallen nearly 12% in March, bringing it below $48 a barrel in recent trade (http://www.marketwatch.com/story/oil-prices-fall-more-than-1-as-traders-fret-about-us-crude-stockpiles-2017-03-22). Concerns about the Organization of the Petroleum Exporting Countries to keep output in check after a global agreement to limit production has been at the center of the worry for oil traders, and that can weigh on energy markets (XLE). McClellan told MarketWatch that the recent slump in stocks, which many have attributed to mounting fears that Trump won't be able to quickly make good on pro-growth pledges, is inspired by black gold, or oil. Trump has promised tax cuts, deregulation and an increase in infrastructure spending during his campaign, which had boosted appetite for stocks in recent months, dubbed the Trump trade. But doubts have emerged as his health-care overhaul comes under pressure. (http://projects.marketwatch.com/2017/trump-scoreboard/?embed=1) "It's not about Trump. Oil led stocks lower, and should continue to do so into April when we get a bottom," McClellan said. To be sure, Tuesday's pullback in the grand scheme of stocks is viewed as hardly a seismic shift in momentum as Stockton suggested. Some strategists argue that a slide or even a correction, defined as a slump of 10% from a recent peak, for the market after a lengthy period without a significant retreat is justified. That said, some are wagering that a correction, or something just short of that, could be in the works. Market technician John Kosar at Asbury Research , estimated that at 4% or 9% retreat in the S&P 500 could unfold in the near-term, saying the he sensed a deeper pullback was under way. Meanwhile, Dennis Gartman , the publisher of the Gartman Letter, said Wednesday (http://www.marketwatch.com/story/dennis-gartman-sees-at-least-a-5-drop-for-stocks-and-shades-of-watergate-2017-03-22)in a CNBC interview that he sees a 5% downturn playing out soon. "Only time shall tell, but I view it very seriously," Gartman said. Also check out: What's next after stock market's sharp drop? Here's what history says (http://www.marketwatch.com/story/how-the-stock-market-performs-after-a-streak-of-at-least-100-days-without-a-1-decline-ends-2017-03-21)
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