Thursday's rally may hurt bulls more in the short term because of the rapid nature of the advance, even though both 20-day MAs and August lows were breached on a closing basis. Bears will see any correction as a vindication of their position, but bulls will have room to work support at Fibonacci retracements and / or January lows, depending on the complexity of the next downward leg. Last Friday I mapped a possible route for the S&P ; the early form was relatively easy to predict, more difficult will be what happens from here. There is still a great deal of skepticism out in the broader media world thingy, but it is the kind of doubt which would suit the contrarian. Datawink (sidenote: his chart pattern recognition tool is nifty, check it out and bookmark - it is a beauty ) sees trouble in the Dow components. Bill over at VIX and More is sounding more optimistic for a bottom. Stockbee points to weakness in breakout stocks and views recent volatility as typical of that bear

Short term overbought conditions are likely to be relieved over the coming days and futures would look to confirm this. In terms of the long term prospects for the market much will ride on the recent 'buy' triggers in the Bullish Percents. If these can be maintained while the market retreats then the foundations for a bottom of consequence will be complete.

The indices have reached an important junction with respect to August resistance; two choices are available: a move to the 50-day MA, or a retest of recent lows. Today's Fed decision marks the signpost for the route to take. I have used the S&P as a case in point, but other indices are in a similar position:

Out-of-action for today. Things should be back to normal for Wednesday

Did last week produce a bottom in the markets? What had the Stockcharters to say about it? Joe summed it up nicely with the rate cut and better than expected earnings from Microsoft. The PowerShares QQQ Trust is in a deep band of support around $42: His Dow chart is interesting as it shows a positive test of 1999 highs: He also shows support busted in the S&P The bearish sequence in the Russell 2000 is clear from the iShares, IWM: Fans on the financial ETF, XLF, should keep an eye on Ted 's support lines: The semiconductor index has three price levels to watch: 368 resistance, 352 support, and 333 support. The point-n-figure Semiconductor index chart is interesting as it relates to what I said about this index and 364. Friday's breakout has a new upside target of 436 - negating the prior breakdown target of 260. The more dynamic ATR point-n-figure chart for the Dow has an upside target of 14,114. Sounds a little ambitious given what has gone before: Maurice Walker had

After dropping into the abyss, the S&P bullish percent is showing some signs of life. Whipsaws are not uncommon for this market internal, but at these levels I would be surprised to see Thursday's signal as such. There is still a little work to do for the Dow bullish percent: With the Nasdaq bullish percent likely to trigger 'long' on Friday: If I was to make a big guess as to what may follow over the next couple of months I would look for something like this :

The last two days have seen tweezer bottoms in large cap indices, a bullish piercing pattern in the Nasdaq 100 , and a (somewhat) bullish engulfing pattern in the Nasdaq . But my favorite, the semicondutor index , refused to buckle in the face of broad market selling over the last week - although it would be hard pushed to shed more than it has already. Wednesday's bullish hammer is the icing on the cake. Watch for a fresh MACD trigger 'buy' (but well below the bullish zero line, a weak signal) as other technicals improve: The Semiconductor index has a Point-n-Figure chart target of 260 (which would amount to a 50%+ decline from its 2007 highs!). To negate this target the index would need to muster an upside breakout, with 364 likely to define such a threshold. The technology sector is one of the first to push higher from a recessionary environment. Chips should lead other technology based sectors. For the purpose of disclosure I am long some deep-in-the-money calls on the