Yesterday morning premarket I wrote

For more aggressive folk, trying to play some sort of near term bounce becomes more attractive.  Due to the rapid pace of this selloff, bears probably would like to see a short term bounces of a few days help to work off this condition.   A move back closer to S&P 1290 would be an attractive area to try a new short trade with a very convenient 'stop out' level just above, in case the market pulls off one of its now infamous V-shaped bounces. 

In no way did I expect a 30 point S&P move in such a short period of time, but at this point nothing surprises me about the market anymore.  The reason I used S&P 1290 instead of 1294 is I thought any sort of bounce would take at least 3-4 days to play out (hence the 50 day moving average would drift down a bit), but it has happened in essentially 1 market day.

So at this point if you are a believer that resistance still matters and the market is not about to go onto yet another new paradigm V shaped bounce it has now become famous for, this is an area (the next 5 S&P points) where an index short could be built.   Using the old rules of the market, this should be a high probability short for 2 reasons - (a) markets don't usually bottom on gap ups as happened yesterday AM and (b) markets usually go back to test recent lows before making a sustained move up (double bottom), hence at minimum one could short until a retest of the lows of Wednesday.  Whatever short exposure one had sold off Tuesday/Wednesday on the swoon selling, I would be re-employing as a hedge here - of course it depends on cash position and long exposure as well.

But again that is how the market acted pre QEinfinity, so nowadays I carry around 2 sets of rules ... new paradigm and pre 2009.  S&P 1294 will be a closely watched area from here for obvious reasons....secondary resistance 1300.  A move over those 2 levels and the bears will be sent back to the corner they have been consigned to for half a year. 

Longer term coast is not completely clear for bulls until a new higher high is in place - I'd want to see S&P 1330 cleared to be singing the praises of The Bernank.