The market’s at an inflection point — a proverbial fork in the road. Unlike most of the market’s minor inflection points, though, this one will likely have major and longer-term consequences, for better worse.

Nowhere is this more pronounced than with a chart of the Dow Jones Industrial Average. While this blue-chip index has yet to actually hit levels that will be all but impossible to recover from, it’s getting closer every day. In fact, Monday’s low of 11,999 — let’s call it 12,000 — may be about as close to the edge an index can walk without falling off.

There are several technical factors in play here, and interestingly, they’re all lining up at that 12,000 mark. In no particular order, notice on the chart below:

• The all-important 200-day moving average line (green) is just a hair under 12,000, and may have played a role in kick-starting Monday’s intraday rebound.
• An intermediate-term support line (orange) that traces all the major lows going back to the March low of 11,155 is also right at 12,000, and could have also played a role in Monday’s partial recovery.
• It may only be a psychological matter, but it still matters as long as the majority of investors believe it does: The 12,000 level is a big round number, which traders tend to treat as make-or-break milestones. If they’re thinking this way now — and they probably are — then one way or another we’re getting fireworks soon.

The trump card, of course, is a confirmed end to the debt-ceiling debate. By the time you’re reading this, it may have been resolved or at least close enough to it. It’s a wild card, however, as even the positive impact of a debt deal may be overshadowed by a looming downgrade of the nation’s credit-worthiness.

Said more simply: Nobody really knows if the market is going to see the glass as half-full or half-empty.

If it is viewed as half-empty, buckle up, because things could get scary. Even just the smallest of moves under 12,000 could trigger a wave of selling (some automated, some discretionary) that could make the May/June pullback look like child’s play.

Things really are different now than they were then – now, we have the fundamental backdrop of lowered earnings guidance along with the potential for higher interest expenses for the federal government’s borrowing.

We’re also dealing with bigger-picture technical bearish momentum. Following the May/June pullback, the 50-day average line (purple), the 100-day moving average line (gray), and the 200-day line were rising, and with a bullish separation between them.

Now, the 50-day line is under the 100-day average, telling us the market’s intermediate-term undertow has already shifted for the worst — even if it doesn’t feel like it has.

In other words, a break under 12,000 this time around won’t be dismissed as just a little volatility. Odds are it will be the straw that breaks the bull’s back. If that happens, the Dow may not find a floor again until the 11,500-11,600 — at least. That move would represent about a 10% correction from recent highs, which is on the low end of ‘normal’ corrective moves. A floor of 11,000 would actually be a more believable meltdown landing spot, or roughly a 14% correction. Both those levels are also key Fibonacci retracement areas (which isn’t an idea that’s necessarily worth researching now if you’re not familiar with Fib lines).

Prediction/Hope: Investors will collectively celebrate an end to the debt ceiling debate with at least a modest buying spree. If not, heaven help us all if we see the Dow slide below 12,000. If June’s low around 11,862 is breached, that’ll be the final nail in the coffin.