After last week’s depressing dive under the 50-day moving average, the S&P 500 index has continued wavering so far this week, seemingly on the cusp of breaking down. Fear has risen 60% since reaching a 1-year low in the middle of this month. Talk of a dreaded correction, one that has been expected for half a year now, is in the forefront once again, and the market bears are coming out of hiding in full force.

So do we just dump and run?

If you take note, the S&P 500 is currently right on top of support, at the 1080-1090 level:

While the bull in me suggests that this is just a buying opportunity in an upward-trending market, the fear in me has me believing that everyone is thinking the same. Whether this be true or not, we need buyers to enter the market very soon. Other than by using technical analysis, I don’t see the catalyst needed to push these markets back up. Especially with talk of a $1.4 trillion budget deficit and leadership and transperancy issues with the Fed and the Treasury department.

These coming days and weeks will be key for the markets in 2010.