Easy money – the market has been relying on it, as have all the banks, mortgage lenders, gold bugs, etc. etc. It almost feels like this is an actual economic recovery; if it weren’t for the fact that the numbers behind our economic growth are less than stellar. Sure, our last GDP numbers “topped expectations”, but in the grand scheme of things, aren’t the expectations surprisingly low?

Here are the major indices, along with the levels in which we need to keep a close eye on – because a break of these levels will signal a change of trend.

If we do indeed get a change of trend on one index, then we have a valuable piece of information to which we can watch the others more closely.

SPX has a clear level at around 1680 as strong support. A break below this with a retrace could signal a change of trend.

Think of an A-B-C reversal setting up to have the index fall and rest around its 50-day moving average. If 1680 holds, then we could get a nice leg higher.

The Russell 2000 is seen by many as a leading indicator of the appetite for risk. When money flows into small-cap, investors are generally searching for higher yields with increasing confidence in the overall market.

The clear line of support here is the 1040 line, which would signify a change of trend if broken along with daily candle closes below this line.

As mentioned above, it’s a good idea to keep an eye on this index first, as when it breaks down, the other indices tend to soon follow.

Overall, tech has been gaining some ground lately. As you can see from the chart, its level of support is quite below the other indices, down around the 3573 level.

Granted, AAPL has pushed of its lows and seems to be holding its 460 level at the moment and most analysts and traders would agree that the price-to-valuation of this company seems very cheap at these levels – however, most would like to see its innovation-to-product cycle increased, as it has been difficult to get excited about a product cycle that has lagged compared to the competition.

With the S&P 10% above its 200 day moving average on low Sept daily volume and the markets at record highs, we can see the affect of this free money is having on the market.

Traders will be on edge with any “taper” talk coming from the Fed. Things could get very ugly, very fast if we begin to break these lines in the sand – causing a selloff from the machines which would bring us down considerably.

Now is the time to take some profit off the table and to hedge up (protect) your longs – as it’s better to give up a little more upside than to risk your portfolio at these lofty levels.