S&P 1360, That’s What Matters: Grasso

Uncertain how overseas developments will impact markets here at home? The Fast Money pros suggest watching some key technical levels.

“The S&P has traded below the 50-day moving average of 1386,” for several days, explains pro trader Steve Grasso.

He says, the next level to watch is 1360 – a level from which the S&P has bounced 3 times since March.

Although the market bounced on Tuesday, it didn’t bounce above 1360.

Grasso says if the S&P closes below 1360 – he'll take it as a sign the bears are in control of the market and more weakness will follow. “I'd take that to mean we’re going even lower.”

If that's the case, he says the next key level on the downside is around 1345 - the 100-day.

Trader Guy Adami also follows technicals and he says right now, “You’ve got to be somewhat agnostic and let the tape be your guide."

Although he agrees that Grasso's scenario is what will most likely play out - he adds, there's a chance that the market springs back and makes new 2012 highs.

"The low in the S&P back in March was 1340 – and that level seems to be holding. With the market paring losses on Tuesday there’s a chance we’ve put in a low for the month. If that’s the case, there’s a chance we also make an outside reversal to the upside.”

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Trader disclosure: On May 8, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long call spreads AAPL; Jon Najarian is long call spreads CIEN; Jon Najarian is long call spreads GS; Jon Najarian is long call spreads FFIV; Jon Najarian is long call spreads NFLX; Jon Najarian is long call spreads AH; Jon Najarian is long CIGX; Jon Najarian is long CBOE; Jon Najarian is long CME; Jon Najarian is long DDMG; Jon Najarian is long PBI PUTS; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Steven Grasso is long RDC; Steven Grasso is long CUBA; Steven Grasso is long GERN; Steven Grasso is long HPQ; Steven Grasso is long HSPO; Steven Grasso is long MU; Steven Grasso is long NYX; Steven Grasso is long NEM; Steven Grasso is long P; Steven Grasso is long PRST; Steven Grasso is long VVUS; Steven Grasso is long XRX; Steven Grasso is long ZNGA; Steven Grasso is long ABX; Steven Grasso is long APC; Steven Grasso is long BAX; Steven Grasso is long CVH; Steven Grasso is long DVN; Steven Grasso is long ESV; Steven Grasso is long GM; Steven Grasso is long TBT; Steven Grasso is long UAL; Steven Grasso is long WSH; Steven Grasso is long UNM

Dennis Garman
Nothing to disclose

For Tony Wible
I, Tony Wible, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views I expressed in this research report.

For Sean McGowan
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For Mathew DiFrisco
Lazard Capital Markets LLC makes a market in MCD securities

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