How much more will the S&P fall? Key level may have the answer

The Standard & Poor's 500 Index is falling toward a key level that, if breached, may mean the gauge will tumble further, according to Ryan Detrick of Schaeffer's Investment Research. The measure should have support between 1,311 and 1,313, around the intraday lows for May 25, Cincinnati-based Detrick said in an interview yesterday. If the index falls below this level, it will have erased a gain of as much as 2.5 percent from the May 25 close. The May low is one of the past major declines near current levels that could act as a support level, Detrick said. The S&P 500 fell 1.8 percent yesterday to 1,319.49. “Technical levels are like steel -- you hit it enough times, it may give way,” Detrick said. “May lows are an area you want to hold support, because if they were to break, that would suggest that anyone who's owned since late May is now at a loss.” The benchmark gauge of American equities traded below the May low for most of June, as it bottomed at 1,265.42 on June 15. It rose as much as 6.9 percent through July 7 as the Institute for Supply Management's factory index showed U.S. manufacturing unexpectedly expanded to 55.3 last month from 53.5 in May. Economists estimated the index would drop to 52, according to the median forecast in a Bloomberg News survey. The measure has fallen 2.5 percent since July 7 amid concerns about European debt and as jobs growth was lower than estimated. Chris Verrone, head of technical analysis at Strategas Research Partners, said proximity to key moving averages also indicates the presence of a support level. The S&P 500 is within 0.3 percent of two levels watched by analysts -- its average level over the past 50 days is 1,316.44, while the mean across the past 100 days is 1,316.87. “We're definitely entering some areas for support right here that will be important for the market to respect if we're going to maintain the gains we've made,” he said. --Bloomberg News