NEW YORK (TheStreet) -- A few weeks ago I wrote "This Is Not Your 2013 Snapback Market Anymore," and I could probably just copy and paste it here, since not that much has changed. High-growth momentum stocks are still getting crushed, utilities are still outperforming and the S&P 500 isn't selling off in the same manner as the iShares Russell 2000 (IWM) and PowerShares (QQQ), which tracks the Nasdaq 100 index -- yet.
What's new is that several high-growth companies, such as Netflix (NFLX), Facebook (FB) and ServiceNow (NOW), have reported earnings that beat the Street's estimates, but their shares sold off hard. That should not be taken lightly.
This market is not acting healthy by any means.
If the market is unhealthy, then shouldn't you just short everything? It would be great if it were that easy. If you are a trader, you already know that without impeccable timing, trying to short stocks in a bull market can be disheartening and destroy your confidence.
Oversold bounces and the choppy nature of this market will destroy traders who aren't nimble and risk-averse. This week's heavy economic calendar, the Federal Reserve policy meeting and more earnings releases will provide catalysts to challenge even the most seasoned traders.
Levels to Watch: The S&P 500 failed to make a higher high and is now sitting near a convergence of the 10-, 20- and 50-day moving averages. The 10- and 20-day moving averages are both near the 1852 level, which will be the first place to look for support going into this week. After that is 1834 and then the previous low of 1814 made on April 11. If the S&P 500 goes lower than that, it's quite likely that it will drop to less than 1800. Levels of resistance to the upside are 1872, 1884 and 1897.
As I have written for several weeks, the S&P 500 should pay a visit to the 200-day MA in the near term. With the recent churning, the 200-day MA is now only 5% away. Whereas in previous weeks I assumed the markets would be facing a sudden, large correction, I have become open to the possibility that the markets may instead remain choppy as prices correct gradually, digesting the gains of the five-year bull market that began in 2009.
At the end of the week before last, when the market closed with strength following a large bounce, I wrote that I didn't believe it would make another V-shape reversal to new highs and that "perhaps in fact this time is different." As you can see above (and now below with the Nasdaq 100 and Russell 2000), this is so far proving to be the case.
Navigating This Week: Keep an eye on the S&P 500 support and resistance levels I mentioned above. Often prices will align with those levels when large catalysts emerge, such as the conclusion of the FOMC meeting at around 2:00 pm EST on Wednesday or the release of the monthly jobs report before the bell on Friday.
So if the market is trending lower and hits support going into or right after one of those catalysts it may shift the trend from down to up. And if it doesn't, then it will help confirm the downtrend. Another thing to watch throughout the week is the iShares Barclays 20+ Year Treasury Bond ETF (TLT). If it continues to break out over 112 then expect the stock market to continue to sell off and vice versa.
Despite the difficult nature of the current market, there are still areas that you can trade. On the long side, many stocks in the Energy Select Sector ETF (XLU), Materials Select Sector ETF (XLB), Utilities Select Sector ETF (XLU) and select airline stocks are still breaking to new highs. On the short side, keep your focus on the stocks within the Consumer Discretionary Select Sector ETF (XLY), Select Sector Retail ETF (XRT), momentum tech stocks and stocks that fall after their earnings are released.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.