It certainly wasn't the start to the shortened trading week the bulls were hoping for. But, even with today's 2.0% tumble from the S&P 500 and 2.5% setback for the NASDAQ Composite, the rebound effort isn't broken yet.
Take a look at the NASDAQ's chart to see why. Although the composite did break back under what used to be a horizontal ceiling at 11,551, the index remains above its 50, 100, and 200-day moving average lines. Perhaps most importantly, it's holding above what will sooner than later turn into a convergence of support around 11,200.
The S&P 500 is holding up similarly. It's fallen well below the 20-day moving average line (blue) at 4092 as well as below a former horizontal ceiling at 4096. But, it's still well above a dense band of technical support between 3904 and 3981.
This of course doesn't mean a breakdown won't or can't happen from here. It may well do it. That's the less likely outcome at this point though.
The past couple of days have been so ugly that some buyers are starting to sniff around again. If they pull the trigger sooner than later -- as in tomorrow -- and heave the indices back above their horizontal ceilings as well as back above their 20-day moving average lines, it may put a bullish spin on whatever news is left to dish out this week. Among these items are tomorrow's minutes from the most recent meeting of the Federal Reserve's chiefs, Friday's new home sales, and Friday's report on last month's consumer spending.
There are a couple more key earnings reports coming this week as well. Nvidia (NVDA) reports tomorrow, and Alibaba (BABA) will do so on Thursday.
Any of these items have the potential to move the market. Again, however, how stocks are moving when the news comes out may well dictate the interpretation of these numbers. It could be seen in a glass-half-full light, or a glass-half-empty light.
Whatever's in the cards from here, just know that there's still lots of technical support below. There's just not a lot of room for stocks left to move lower before this support is given a huge test.
In some way though, that might be the best thing for traders. It will for the bulls or the bears to finally play their cards, so to speak.