Beware the market's 'limbo line': BofA strategist

BofA technician: 1,700 is critical for the S&P

Bank of America's top equity technical strategist warns that the 1,700 level is hugely important for the . And now that the market closed below that round number, the index could be due for a drop down to 1,650.

"It is an important level," Stephen Suttmeier told CNBC on Tuesday's "Futures Now." The dip below 1,700 "calls into question the breakout that we just saw in the S&P 500. So that 'limbo line' is very important."

(Read more: Here's why I'm shorting the market today: Pro)

Indeed, the S&P was trading just above 1,700 a week ago before the Federal Reserve's announcement that it would not taper the pace of asset purchases quickly sent the market up to 1,729, an all-time high. But over the next four days of trading, the market traded all the way down to 1,695.

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Suttmeier points to other warning signs as well. "We are seeing some near-term leadership lost from the financials, and that typically could provide an overhang on the equity market," the chief equity technical strategist at Bank of America Merrill Lynch Global Research said.

All in all, Suttmeier sees the market dipping a bit lower. Speaking before Tuesday's close, he said: "If 1,700 did give way here, it probably would suggest that the S&P would pull back toward 1,674, 1,650."

The S&P, which had already dipped below 1,700, closed the day at 1,697. To Suttmeier's work, this sets the market up for another 3 percent drop.

(Read more: 'Uptrend is intact' for S&P 500: Yamada)

Still, not every technician finds the 1,700 level as important as Suttmeier does.

"No documentation exists to support the oft-argued importance of the round-number psychology in the market," Oppenheimer Chief Market Technician Carter Worth wrote to "There is no importance to the 1700 level vs. 1725, say… or 1675."

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

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