The market is testing a critical support point. The previous low closing price of the Dow was 7,552.29 on November 20, 2008. As of this writing, the market was trading at 7586.69, down 263 points on the day.

That means the market is only 34 points away from the low on November 20.

It seems that the market will test the previous low, and I can’t stress enough how important it is for the market to hold its ground and close above the 7552 level.

If the market breaks down below that mark and closes under 7552, look out below.

For all the technical market analysts out there, a critical support level will be broken, and that’s a big deal. Once a support level is broken, not only does the market typically fall down until the next one can be found, but the old support level can now become a resistance level if and when the market rallies back up.

Holding the line can be seen as a bullish sign that the market is fighting to hold that critical level. Of course, if it doesn’t hold, the bears will have taken over and shorting the market is the best play.

Either way, watch this critical number and make sure you are safely positioned either way. If you are bullish and the market holds, going long the Diamonds could make some short term gains, and if you are a Bear and the market drops below the 7552 level, shorting the Diamonds could prove rewarding with some quick gains.

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