Is s&p flashing critical sell signals?

On Monday chatter on the Street again had everything to do with whether Europe's financial woes would push the US off the side of a clip. The S&P traded sharply lower and the Dow

slipped by triple digits after a budget drafted in Greece showed Athens would miss its deficit targets for both this year and next despite harsh new austerity measures. The developments

brought the potential of a Greece default that much closer. "If Greece continues to have problems that could really drag Europe into recession, and possibly the U.S. as well,"

explains Randall Warren, chief investment officer of Warren Financial Service in a Reuters interview. However, that’s not to say there aren’t any positive catalysts in the market. There are.

The Institute for Supply Management's September manufacturing index topped consensus forecasts and the government said August construction spending unexpectedly rose. "The data

supports the minority view that things are going to get better," Warren says. "You can't discount that view even as the market finds it hard to believe, and that's why

things are so choppy today." How should you trade now? In an environment like this, The Fast Money gang suggests watching technicals. They say the market is flirting with a number of

key levels and whether the market bounces or breaks could be very telling. ”I’m watching 1120 on the S&P,” Fast trader Pete Najarian tells us .“It’s been a level of support over the

summer. ”If it holds we’re ok, but if we break below it all bets are off.” Trader Steve Grasso is focused just a little lower. He thinks the market is looking to test 1101. And he tells us

the test could come in the next couple of days. And like Najarian, whether it holds or breaks will influence his trades. Katie Stockton, chief market technician at MKM is also watching the

same levels. However her bias appears to be lower. ”September was important – we got an important technical signal,” she tells us in a live interview. “ Stockton is referring to something

called the MACD Indicator and although it involves somewhat complex technical analysis, the take away is that it has flashed its first sell signal since Dec 2007. The last time it happened

the signal was very prescient. “The December 2007 signal was a precursor to a decline of more than 30% in the S&P,” she tells us. This time she thinks it could be a sign that the S&P

slides by another 150 points. How will you know if the market is about to break in a big way? Watch 1100, that same level that’s held all summer. “If the market breaks below that level on

consecutive weekly closes, then we’re setting up for a prolonged fall,” Stockton says. “Then we’re setting up for 935.” And it’s not just Stockton who sees that kind of giant swing on the

horizon. According to Pete Najarian the action in the Vix suggests big swings are likely – however he says the swing could come in either direction. Only one thing’s for sure - “There’s a

lot of risk and uncertainty coming into the market,” he says. ______________________________________________________ Got something to to say? Send us an e-mail at [email protected] and

your comment might be posted on the _Rapid Recap. _If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to . _Trader disclosure: On Oct 3,

2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;_ Pete Najarian _Najarian

is long (AAPL) __Najarian is long (C) __Najarian is long (MS) __Najarian is long (MRVL) __Najarian is long (HPQ) __Najarian is long (WLT) calls | __Najarian is long (YHOO) calls_ _Steve

Grasso __Grasso owns AKS __Grasso owns AKS __Grasso owns ASTM __Grasso owns BA __Grasso owns BAC __Grasso owns D __Grasso owns LIT __Grasso owns MHY __Grasso owns PFE __Grasso owns PRST

__Grasso owns S_ _For Steve Grasso Stuart Frankel & Co and it’s partners own CSCO __Stuart Frankel & Co and it’s partners own CUBA __Stuart Frankel & Co and it’s partners own FDX

__Stuart Frankel & Co and it’s partners own GERN __Stuart Frankel & Co and it’s partners own HPQ __Stuart Frankel & Co and it’s partners own HSPO __Stuart Frankel & Co and

it’s partners own JPM __Stuart Frankel & Co and it’s partners own MET __Stuart Frankel & Co and it’s partners own MSFT __Stuart Frankel & Co and it’s partners own MU __Stuart

Frankel & Co and it’s partners own NYX __Stuart Frankel & Co and it’s partners own PFE __Stuart Frankel & Co and it’s partners own PRST __Stuart Frankel & Co and it’s

partners own RHT __Stuart Frankel & Co and it’s partners own SDS __Stuart Frankel & Co and it’s partners own UAL __Stuart Frankel & Co and it’s partners own XRX __Stuart Frankel

& Co and it’s partners are short QQQQ_ Steve Weiss _Weiss owns (HPQ) __Weiss owns (EUO) __Weiss owns (WLP)_ _Zach Karabell __Karabell owns (JPM) __Karabell owns (AAPL) __Karabell owns

(FCX) __Karabell owns (GOOG)_ _For Zach Karabell __Rivertwice Capital is short (XLF) __Rivertwice Capital is short (AA) __Rivertwice Capital is owns (PDN) puts __Rivertwice Capital is owns

(HPQ) calls_ _Katie Stockton __Katie Stockton of MKM Partners, has a position in (UUP) _ _CNBC.com with wires._