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Guy Adami: If Market Holds, S&P Bounce Could Be Violent

It was all bulls could do to keep afloat in a sea of red Thursday as the bears roared back with a vengeance.

By the close the S&P was sharply lower and the Dow had plunged by triple digits after a gloomy Fed outlook and weak data from China convinced money managers that risk was best taken off the table.

Considering the market has closed lower for 4 consecutive days, how should you position yourself?

Trader Tim Seymour thinks the market is all about technical levels. And he says what happens at 1121 could be revealing.

Although Seymour thinks it could go either way, his bias is that this key technical level breaks in part because a stronger dollar has been negative for commodities and natural resource names. "I think the dollar index is going to 81 and it's a wrecking ball for commodities. People who say we’ve made lows of year – they need to take another look. I think markets are in a dangerous technical place.”

Word on the Street: Financial Markets Selloff

Pete Najarian shares Seymour’s skepticism. He’s watching the put activity in the XLB , the materials ETF. He’s seeing aggressive buying. “There's been all kinds of put activity. Institutional investors think there’s more downside,” he says.

The usually bearish Guy Adami is one the other side – at least in the near term. He thinks over the next few days the path of least resistance could be higher. “We tend to bounce off 1120 – the market seems to want to find a bottom in the near term. If we start to rally on Friday – you’re taking your life in your hands if you stay short.”

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