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What’s Ahead for the S&P 500?

Last week was a tumultuous one for the S&P 500 index. As we look forward to this week, can we expect the market to do a quick turnabout — or will it drop like one of Mike Tyson's early opponents?

What’s Ahead for the S&P 500?

Here's what to look for.

When President Barack Obama won re-election over Republican challenger Mitt Romney last week, we saw the S&P drop 40 handles. I am not blaming the president for the sell-off. Rather, I believe the drop was more of a reflection of the reality of the "fiscal cliff" and the realization that tax increases and spending cuts are on the way.

(Read More: What Is the 'Fiscal Cliff?')

Trusting in the sanity of Congress is an act of insanity in itself.

And given the glacial pace at which Congress usually moves, an agreement seems far off at best. So far, however, all the key players are saying the right things. I think any wavering by the president or Congress, any stalemate by either, or any kicking of the can down the road by either, will be viewed as bearish for equities and the S&P, and the market will react swiftly.

Another headwind for the markets is superstorm Sandy. The big question there: How will Sandy affect consumer spending into the holidays? The region affected by Sandy accounts for 24 percent of all retail sales in the country. Insurance companies estimate that only half of Sandy's losses will be covered. If there is any indication that consumer spending has pulled back ahead of their most important time of the year for retailers, then this market could really hit the deck.

(See: Scenes From Superstorm Sandy)

So given all this, how should you look to play the S&P today?

I believe that until indicators change, the S&P is in the "sell the pop," or "sell the rally" mode.

Some keys levels to watch and at which to potentially get short: 1,400, 1,410, 1,425, 1,440, and 1,440. Levels of support: 1,365, 1,350, 1,325 and 1,302.

Read on for 10 Things You Need to Know to Trade Futures

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