Stay alert this week, as a confirmed breakout above the 200-day MA in the S&P 500 could trigger substantial short covering in the market.

Overall price action remains schizophrenic, as evidenced by the large day-to-day percentage swings in both directions.

With the 50-day moving averages closing in from below, and the 200-day moving averages closing in from above, it shouldn't be much longer until we see the trend resolution.

The technical picture of the main stock market indexes has not changed.  The S&P, Nasdaq, and Dow all remain trapped in the middle of their multi-week trading ranges.

With the 50-day MA rising up to soon provide support, and the 200-day MA descending to act as resistance, the S&P 500 will be forced to make a decisive break in either direction.

Going into today, Deron Wagner will keep an eye on yesterday's lows in the broad-based indexes. He would be concerned about holding long positions over the holiday weekend if the S&P, Dow, or Nasdaq close below yesterday's lows.

A closing break below the May 18 lows would likely lead to a retracement down to the 50-day moving averages.

If stocks hold above their May 18 lows for the next several days, odds are good the major indices will rally back to test their early May highs shortly thereafter.

Yesterday's overly light volume gives Deron Wagner cause for concern, as does the considerable amount of overhead supply that remains from the pullback of the past two weeks.

The Nasdaq has technically entered into pullback mode, and a substantial retracement from this month's highs would not be surprising, especially given the market's huge gains over the past two months.