Retest of the February lows is 'entirely possible,' trader warns. Watch out for these levels

Stocks are giving investors whiplash.

The S&P 500 touched its lowest level in five months on Tuesday, only to rally and end the day down by around half of a percent. The index is now down 6.81 percent from its high hit just over a month ago as of Tuesday's close.

Technical analyst Todd Gordon of TradingAnalysis.com is eyeing one level that could be the line in the sand for the rally.

Looking at a long-term chart of the S&P 500, Gordon points out that an uptrend that's been in place since 2016 has acted as support for the market whenever stocks have fallen. But the latest sell-off has sent the S&P plunging below the uptrend line "with quite a vengeance," according to Gordon, to the point where he believes more pain could be ahead.

Gordon said the S&P needs to hold the 2,545 level, but "a retest of the 2018 lows is entirely possible." The S&P 500's low for the year was 2,532.69 during the Feb. 9 trading day.

But should the index break below 2,545, just how bad could the sell-off be? Gordon is eyeing a 50 percent retracement in the S&P 500, meaning that 2,372 is the next trouble spot for him in the index.

"If we get below 2,372, then I think the retracement will be much deeper," Gordon said Tuesday on CNBC's "Trading Nation," further adding that "even 2,000 is possible" on the S&P should that occur.

The S&P 500 closed at 2,740.69 on Tuesday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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