Psychology of 1040

You can say we have been range bound since September 2009, when the market first broke through 1040 after the 2008 crash.  Since then, there have only been brief moments in the market when we've traded at or below 1040.  They have all been great buying opportunities.  But since May, those buying opportunities at 1040 have become more frequent, and the market has spent a lot of time below its 200 day moving average.  Both are negative signals for the market. 

This past week, we hit 1040 again, twice, and bounced strongly both times.  Will traders provide support at 1040 again the next time it is hit?  I doubt it.  Anecdotally, a lot of traders seem to be afraid of September, so it makes it harder to game a washout to below 1000.  But the short base seems shallower than in February or May-June.  There will be less short covering support this time around.

Although well advertised, the fundamental backdrop is supportive of a washout.  The daily chart looks bearish to me.  Hedge funds could panic out or go short in a chase for performance if we break 1040 decisively.