The knee jerk reaction to the Osama bin Laden death took the S&P 500 up to 1370 Monday AM. I mentioned yesterday morning premarket that this market would be overbought soon, as the index was already 1.7% above the 13 day moving average - even before the Monday morning gap up. I vacillate between using the 10 day and 13 day moving average but one or the other has been the major trend support for the entire move since late August 2010. In more normal markets we'd use the 20 day moving average or even the 50 day moving average but the V shaped moves up, without any meaningful pullbacks within said V shaped up moves has created a rarely seen level of strength.
Either way we are now close to pulling back to that type of support as about 20 points have been shed. The 10 day moving average is at 1347 and the 13 day is at 1344. I'd expect buyers to come in at these levels - until the pattern changes you have to assume it continues. With this sort of thinking you will be very wrong one time (when the trend changes) but right all the other times. In a normal market, I'd prefer to wait until the 20 day moving average was hit, as it is more traditional support.
That said it is interesting to see a lot more damage under the surface today as a lot of the momo trades have broken badly today - Chinese internet and silver most obvious. The sad dollar is not really showing any great strength (+0.2%) but it's not down which has been a rarity.