The 1010 level now is almost a certainty, but then what, is the ?

For the last few weeks, all of my technical, sentiment and gut indicators were pointing for an upcoming market wash out and an eventual tag of a 1010 level on the SPX. The chart below shows how each of the support levels has been systematically broken and how subsequent rallies failed to get any kind of sustainable bounce. The sentiment is as bad as it has been in at least few a year, and although eventually this would be a great way to bet against, for the time being, no one should be standing in front of the herd. The stamped is here, and its no longer just a dust cloud near horizon.

The rhetoric aside, this is how I'm positioned. I am basically market neutral, with maybe a short net long exposure in some of my long term retirement accounts where I am just unwilling to sell to incur capital gains and would just prefer to protect the exposure with short ETFs. These ETFS (SDS, TZA, QID) are dangerous razor blades and one should play very carefully.

My best guess is that we will get to 1000-1010 over the next few days (or hours). We could test this level and actually get below 1000, closer to 990. I would expect an aggressive bounce here and will likely remove my negative bias, by closing my short positions and potentially going long. As a reminder, the 1000-1010 level is a KEY level both psychologically and technically (fib 32%). Even if I am wrong, and we go lower than 990, let's say 940-950, the next major support, the bounce will come and the bounce will likely take it to the breached support of 1000-1010 level, giving you a chance to sell it there...so what I am saying is that buying 1010 level will give you a shot to play a bounce from there or give you an exit at a small loss or even money when the index bounces to that level.

Of course many will still be predicting even lower levels, so one needs stay fluid in this market and reevaluate our stance frequently. Time to pay attention.