The S&P 500 is back above 2,400 after more wild swings on Wall Street.

Miller Tabak chief market strategist Matt Maley said the index needs to hold one critical level to determine whether markets can stabilize or resume their free fall.

"We've had several other support levels that we've been looking at over the last few weeks and the market has gone right through them like a hot knife through butter, and it's so been quite a problem. However, really the next crucial level is one that has at least held the last couple of days, and that's 2,350 to 2,351 to be exact," Maley told CNBC's "Trading Nation" on Thursday.

That marker is the lows seen in late 2018. At that time, stocks plummeted on fears the Federal Reserve had tightened monetary conditions too quickly.

"Now we went down and actually broke below that level slightly on Wednesday and then again … on Thursday, but both times we've bounced back," said Maley. "If we can rally even further off that, that's going to … finally give [investors] some confidence that we can get a rally of more than one day."

If markets cannot hold above the 2,351 level and instead break and hold below, Maley warns that it could be a steep decline back to lows not seen since early 2016 at around 1,829. A drop to that level would represent a total 46% fall from records set a month ago.

Should markets hold above that level, Maley says the S&P 500 could recapture 2,500 based off a trend line stretching to 2009. After that, its 200-week moving average at 2,641 will give the next band of resistance.

Chantico Global CEO Gina Sanchez said the underlying market action gives clues as to where the bellwether index could next move.

"Watch the tenor of the market and by the tenor I mean, we're looking at what is performing relative to its risk or relative to how highly valued it is, and up until very recently, I'd say the last couple of days, this market has actually still maintained a growth, high value, very high beta version of how it has sold off — which is that the expensive stuff stayed expensive and the cheap stuff got cheaper," Sanchez during the same segment.

However, this could mean the market has further to fall before investors get bullish and jump back in, Sanchez says.

"This is a really confused market," she added. "Until it capitulates, we're not going to see a washout of the market where you see investors broadly moving and saying, 'Hey, all of this stuff is cheap, we need to buy this broadly.'"

Communications services and the staples sectors are in the green in the past week, while energy, industrials and real estate investments trusts have bottomed out the index.

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