Update

Here is a daily bar chart of the S&P 500 going back to the 2009 bear market low. As you can see the market is still trading above its rising 200 day moving average (lower blue arrow - the upper arrow points to the 50 day moving average). Sentiment is very bearish and I think this makes it likely that the drop from the May 2 top has ended or will end soon and not far from current levels. That implies that the 200 day moving average will show no significant downside penetration and the implication is that new bull market highs will be seen during the next few months.

Today's break is more likely to be a successful test of the June 16 low than the start of a bigger move down. A close today in the cash S&P above 1275 would convince me of this and be very bullish.

But if you happen to be more bearishly inclined it makes sense to identify support levels below the market. The closest one is the rising, green dash, bull market trend line which currently is at 1240 or so. The March 2010 low was 1249 so a drop to 1240 would not only hit support but set up very bullish shakeout situation.

The April 2010 top was at 1219 (red dash line)and this is the next support level on the way down. Typically old tops like this one are broken by 10-20 points before support becomes visible. Below that top is the midpoint of the rally from last July's low to the May 2011 top (purple dash line). This midpoint is at 1186. Below this midpoint is support implied by a repetition of the size of last year's break. That would carry the S&P down to 1153 (blue dash rectangle).

For longer term planning I am going to use the market's action relative to its 200 day moving average as the indicator of the direction of the current long term trend. Right now this moving average is telling us that no bear market is in sight.