If the S&P manages to rally above Thursday's high, it would be very bullish and could help send the relatively strong Nasdaq to fresh highs. Conversely, a close below Thursday's low would help solidify new resistance of the 50-day moving average and would likely trigger a sell-off that would break the June lows.

At 2:15 pm EDT, the Federal Reserve Board will announce their decision on interest rates and, more importantly, the forward-looking stance on economic policy. Though rates are widely expected to remain unchanged, Wall Street will be looking for hints in the Fed commentary of whether or not inflation remains a risk.

Today begins a two-day meeting of the Federal Reserve Board, which concludes with an announcement on interest rates and economic policy on Thursday afternoon. Virtually nobody is expecting an increase in the Fed Funds Rate, but economists and traders will be closely monitoring the wording of economic policy going forward. As usual, expect trade to remain light ahead of tomorrow's announcement.

Based on the action of the past two days, it looks as though the bears are winning.

If the S&P holds above its June low, it could still move back above its 50-day MA without a great degree of difficulty. However, a break below 1,490 would likely trigger a round of institutional selling that results in a high-momentum downward move. The "double top" formation in the S&P would also be confirmed.

QQQQ missed triggering Deron Wagner's long entry on June 20, but he's once again stalking it for a potential buy above the high of its range.

Going into today, the S&P is poised to continue its downward momentum and once again test its 50-day MA. Conversely, the Nasdaq could attempt to brush off yesterday's weakness and grind its way back to the high.

The broad market's narrow-range consolidation of the past three days is bullish, as it is enabling stocks to correct by time, rather than price. The longer the major indices trade in a tight, sideways range near their highs, the more powerful the eventual breakouts should be.

If the S&P 500 pulls back further today, expect the first area of support to be found near the 20-day exponential moving average.

On a technical level, the most bullish thing about last Friday's session was the corresponding volume spikes. Total volume in the NYSE increased by 27% over the previous day's level, while volume in the Nasdaq rocketed 41% higher.