The war of 1812: Has the S&P 500 bottomed?

Chart-minded market watchers are starting to sound like military history buffs.

The most widely discussed level for the S&P 500 has become 1,812. In a tough Thursday for stocks, this was the low made in the morning by the large-cap index, before stocks began to cut their losses. At 2:30 p.m., ET, the S&P found that level again, briefly bounced off of it, and then got 2 points below at 1,810 – before moving much higher with the help of an oil turnabout.

There is reason to believe that the 1,812 level isn't merely random.

Back on a gut-wrenching Jan. 20, the S&P hit 1,812 before turning higher. That made the level the lowest one seen by stocks over the past two years.

And of course, 1,812 is a number that tends to stick in one's mind.

"While the 'War of 1812' was a military conflict … yesterday the 'War of 1812' was the battle by the S&P 500 to stay above its intraday 'print low' of 1812.29 made on January 20," Raymond James strategist Jeff Saut wrote in a note sent Friday, referring to the 2½-year British-American conflict that began that year.

Meanwhile, Eddy Elfenbein of the Crossing Wall Street blog refers to the level as the market's "Tchaikovsky low," based on the name of the Russian composer of the "1812 Overture," which was inspired by Napoleon's failed attempt to conquer Moscow.

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War of 1812: Battle of Lake Erie
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War of 1812: Battle of Lake Erie

Jokes aside, the market does appear to coalesce around certain numbers. Technical analysts would warn that a break below a level as widely watched as 1,812 would indicate a shift in sentiment that would set stocks up for further losses. Such a drop would indicate that the market isn't satisfied to test the lows — it must go below them, beginning the hunt for the next level of support.

Falling below a key level can also make it harder for nervous traders to put on bullish trades, as it make it more difficult to determine the downside level (known as a trade's "stop-loss") at which one would want to give up and exit the position.

On Friday, the S&P 500 is appearing to put 1,812 behind it, as it enjoys a substantial bounce. But if the market can't hold its lows the next time traders start humming Tchaikovsky, stocks could be in big trouble indeed.

Did somebody just say "Nutcracker"?

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