diff --git a/src/shared/index.js b/src/shared/index.js
index cf953e4bf1..d9d6475e64 100644
--- a/src/shared/index.js
+++ b/src/shared/index.js
@@ -100,7 +100,7 @@ export function observe(key, callback, options) {
 }
 
 export function observeDev(key, callback, options) {
-	var c = (key = '' + key).search(/[^\w]/);
+	var c = (key = '' + key).search(/[.[]/);
 	if (c > -1) {
 		var message =
 			'The first argument to component.observe(...) must be the name of a top-level property';
diff --git a/test/js/samples/legacy-default/expected-bundle.js b/test/js/samples/legacy-default/expected-bundle.js
index f2fa173262..023ac9b1bc 100644
--- a/test/js/samples/legacy-default/expected-bundle.js
+++ b/test/js/samples/legacy-default/expected-bundle.js
@@ -204,7 +204,7 @@ var proto = {
 };
 
 /* generated by Svelte vX.Y.Z */
-function create_main_fragment(state, component) {
+function create_main_fragment(component, state) {
 	var text, p, text_1, text_2, text_3, slot_content_default = component._slotted["default"], slot_content_default_before, slot_content_default_after;
 
 	var foo = new Foo({
@@ -270,7 +270,7 @@ function SvelteComponent(options) {
 
 	this.slots = {};
 
-	this._fragment = create_main_fragment(this._state, this);
+	this._fragment = create_main_fragment(this, this._state);
 
 	if (options.target) {
 		this._fragment.c();
diff --git a/test/js/samples/legacy-default/expected.js b/test/js/samples/legacy-default/expected.js
index 27cdd1896f..6c90bb8f13 100644
--- a/test/js/samples/legacy-default/expected.js
+++ b/test/js/samples/legacy-default/expected.js
@@ -1,7 +1,7 @@
 /* generated by Svelte vX.Y.Z */
 import { appendNode, assign, callAll, createComment, createElement, createFragment, createText, detachNode, init, insertNode, noop, proto, reinsertBetween } from "svelte/shared.js";
 
-function create_main_fragment(state, component) {
+function create_main_fragment(component, state) {
 	var text, p, text_1, text_2, text_3, slot_content_default = component._slotted["default"], slot_content_default_before, slot_content_default_after;
 
 	var foo = new Foo({
@@ -67,7 +67,7 @@ function SvelteComponent(options) {
 
 	this.slots = {};
 
-	this._fragment = create_main_fragment(this._state, this);
+	this._fragment = create_main_fragment(this, this._state);
 
 	if (options.target) {
 		this._fragment.c();
diff --git a/test/runtime/samples/store-observe-dollar/_config.js b/test/runtime/samples/store-observe-dollar/_config.js
new file mode 100644
index 0000000000..1861b937d9
--- /dev/null
+++ b/test/runtime/samples/store-observe-dollar/_config.js
@@ -0,0 +1,25 @@
+import { Store } from '../../../../store.js';
+
+const store = new Store({
+	name: 'world'
+});
+
+export default {
+	store,
+
+	html: `<h1>Hello world!</h1>`,
+
+	dev: true,
+
+	test(assert, component) {
+		const names = [];
+
+		component.observe('$name', name => {
+			names.push(name);
+		});
+
+		store.set({ name: 'everybody' });
+
+		assert.deepEqual(names, ['world', 'everybody']);
+	}
+};
\ No newline at end of file
diff --git a/test/runtime/samples/store-observe-dollar/main.html b/test/runtime/samples/store-observe-dollar/main.html
new file mode 100644
index 0000000000..28154934b8
--- /dev/null
+++ b/test/runtime/samples/store-observe-dollar/main.html
@@ -0,0 +1 @@
+<h1>Hello {{$name}}!</h1>
\ No newline at end of file