That is, in order to get protection on stocks, individuals will simply buy a position that will show returns if the S&P 500 falls below 2,000 within a given time frame. Indeed, the put contract expiring in December with a strike price of 2,000 is the most widely held option expiring in 2015, and can currently be purchased for about 1 percent of the price of the index.
The thought among those trading stocks that such a critical level exists actually has a parallel in America's other favorite pastime: Baseball.
Mario Mendoza, a shortstop who played for the Pittsburgh Pirates, Seattle Mariners and Texas Rangers in the 1970s and early 1980s, was known as a good fielder but weak hitter. With a career average batting average of .215, he struggled to stay about .200. This figure has become known as the batting average separating decent hitting (such as would allow a manager to keep an excellent fielder in a lineup) from true offensive incompetence.
Even though the average batting average varies from year to year and from team to team, if a hitter falls below the so-called Mendoza line of .200, he is generally in trouble.
Read MoreWalks are way down in baseball, because of 'capitalism'
Similarly, the 2,000 level on the S&P is where market participants will change their minds about stocks, determining that they are in bad shape — which threatens to become a self-fulfilling prophesy that will lead to the actual acceleration of losses, said Streible.
"That is the level we keep testing," he said in a Tuesday "Trading Nation" segment. "If we come back below 2,000, the market should continue going lower."