Stocks suffered a bitter Tuesday, with the sliding 1.24 percent for its worst day in nearly a month, hitting its lowest level in four weeks in the process. But Jonathan Krinsky, chief market technician at MKM Partners, expects to see a key technical pattern stanch the bleeding.
The S&P dropped as low at 2,129 on Tuesday, and closed only slightly higher at 2,137. But the good news, for the technical analyst, is that the market managed to keep the 2,120 level below its feet.
This is the level at or around which the market topped out in November, April and June — which for the chart watcher, indicated that it served as a level of resistance.
Once the market broke above this resistance level in early July, it became even more important. After all, technical analysts believe that shattered resistance becomes support. And indeed, after the S&P broke out decisively above 2,120 in early July, it bottomed at or around that price on four consecutive days in mid-September.
Since 2,120 represents "the September lows as well as the resistance area we broke out of in July, we think it probably acts as decent support should we get down there," Krinsky said Tuesday on CNBC's "Power Lunch."
In a phone interview after the close, Krinsky added that if this level is breached, the S&P could fall to the "psychologically important" round-number level of 2,100; below that, the S&P could find its way down to its 200-day moving average, at about 2,060.
That is far from the base case, however.
"At this point, I'm still under the assumption that 2,120 holds," he said.