Before we take a look at what the bulls have to work with this new week, someone needs to give credit to the Pacman style buyer of the S&P futures during the night last Wednesday and Thursday. It caused the market to put in at least a short term bottom. Of course, they had a little help, or should say a lot of help, in that there has been massive Put buying the past two weeks and with options expiring last Friday, Wall Street came in to assist in turning the market back up so they could wipe off a great deal of the Puts that had been bought. Now that their dirty deed is done, we will see how much they would like to work with the Fed on taking the market back up.
Looking at the charts above, there are a lot of technicals that will be helping the bulls this week. In the top left chart, we see that the S&P held support at the 324 EMA which is a critical line not to be broken. In the inlay chart, we see that the weekly S&P candle is a bullish long tail reversal hammer. In the top right chart, we can see that the S&P held at the April low. In the bottom left corner chart, we see that the iPath S&P 500 Vix Short Term Fut (ARCA:VXX)'s incline channel is helping keep it below the 40.25 line.
In the bottom right chart we see the most important thing that could help the bulls take back control of the market: Fed president Bullard came out and announced that QE may be extended right as the market was struggling to solidify a bottom. Since that moment there has been continuous short covering on big volume and we may actually have a playable bounce now.