Tuesday's modest declines came amid a growing consensus that the market's upward momentum from the mid-March lows ended with Monday's steep losses.

At this juncture, the widely held view of a modest setback followed by renewed strength should be given the benefit of the doubt, until disproved. Experience (and math) dictates that betting on extreme scenarios -- in either direction -- is usually futile. Still, these are not normal times and thus the extent and severity of any continued pullback (and rebound) is the subject of serious debate.

Optimists believe any setbacks should be viewed as buying opportunities, as Thomas McManus of Banc of America Securities declared Monday. RealMoney.com commentator James Cramer is also in this camp, which seems to be growing.

"While we are expecting prices to fall, the odds do not favor the type of pervasive decline we saw last summer," Martin Pring, editor of The InterMarket Report, wrote Tuesday. "A more likely scenario is a short but sharp shakeout as complacent latecomers to the rally are quickly liquidated and overall sentiment returns to one of caution."

Pring suggested the S&P 500's 200-day moving average (as of Monday's close) of around 880 is "not an unreasonable target" for this expected downward move. Notably, 880 isn't far from a 50% Fibonacci retracement of the S&P's rally from its closing low of 800.73 on March 11 to its closing high of 946.67 on May 15 (Fibonacci, of course, is the medieval Italian mathematician whose observations on naturally recurring numerical sequences have been adopted by chartists). A 50% retracement would take the S&P to around 873, enough of an "overshoot" of the level Pring cited to spook some traders, potentially setting the index up for a rebound.

Other near-term targets to watch on the presumptive path downward include the 50-day moving averages of around 8329 for the Dow Jones Industrial Average, 891 for the S&P and 1426 for the Nasdaq Composite.

Separately but similarly, Prudential Securities' chief technical analyst Ralph Acampora viewed Monday's setback as the beginning of a "long overdue" near-term correction. However, Acampora is "very enthusiastic and encourage d our clients to be aggressive buyers of stock." He believes the rally from the March lows has "more upside potential" in the intermediate term, and that the August highs of Dow 9077 and S&P 965 will be broken. The Comp's comparable obstacle is its May 2002 high of 1759, he wrote.

Belly of the Curve

Whatever you think of McManus, Cramer, Pring and/or Acampora individually, they collectively have a tremendous amount of market-related experience. More important, they represent the "belly of the curve," as it pertains to current sentiment. Specifically, they believe that the rally from the mid-March lows is likely to prove more extensive and longer-lasting than previous rallies since the peak in early 2000.

So far, the current rally has been better technically than its predecessors and the historic decline in Treasury yields, which accelerated Tuesday, has made stocks relatively more attractive, even if they're not cheap on an absolute basis.

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