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.

The Fat Tails

A more extreme bullish view arrived Tuesday from Merrill Lynch chief market analyst Richard McCabe, via the firm's chief technology strategist Steven Milunovich.

In an attempt to explain a tech-led rally "that appears to have little fundamental justification," Milunovich cited McCabe's technical viewpoint. According to the chart reader, the Comp could rebound to around 2000 in this current move. McCabe based that estimate on the recovery rallies in U.S. stocks in the 1930s, and Japan's Nikkei and gold after their respective "bubbles" in the 1980s and 1970s.

At the other end of the spectrum are hard-core bears such as RealMoney.com contributor Bill Fleckenstein and Steve Hochberg of Elliott Wave International. On May 2 , faithful readers may recall, Hochberg said that failure by the S&P 500 to exceed its Dec. 2 intraday high of 954 (which it hasn't) would suggest a "running triangle" was intact. Such a pattern indicated the index will retest, if not break, its October lows during its next down leg, he said. (Recently, technicians such as Gary B. Smith have observed a rising wedge formation in the S&P 500, which has triangular -- and in this case bearish -- implications.)

Another draconian view comes from Richard Williams, strategist at Summit Analytic Partners, who Tuesday morning dubbed the session "one of the most crucial days this year for the market."

Key short-term support levels -- 8560 to 8620 for the Dow, 927 to 935 for the S&P and 1535 to 1540 for the Nasdaq -- "must be regained or held or the market will be vulnerable to a rapid selloff to substantially lower levels," Williams declared.

Those levels certainly weren't reached Tuesday, but the market did put on an impressive show of resistance to a litany of potentially destabilizing negatives.

Fly in the Ointment

Despite giving credence to the majority (aka the "bellyists"), I find the ongoing weakness in the dollar troubling. I'm apparently in good company. Legendary hedge fund manager George Soros is shorting the dollar and dubbed Treasury Secretary John Snow's recent comments "irresponsible," in an interview Tuesday on CNBC.

Most unsettling is the constant stream of "a weaker dollar is good" articles in the press, as per Tuesday's "Heard on the Street" column in The Wall Street Journal. The piece buried any potential risks to a declining dollar to the very end, and even suggested the stock market and economy could do well in the event of a "rout" in the greenback.

I disagree, for a number of reasons discussed here Monday . There were other Journal pieces -- and an editorial -- that pointed out the problems of a weaker dollar and of a Treasury secretary who talks too much. But the takeaway from overall financial press coverage is that a weaker buck is a good idea.

"One must be suspicious of such assertions," according to Jeff Brotman, an accounting professor at the University of Pennsylvania. "I'm not saying that they're wrong, but nobody can be so confident that they're right."

We are living in "unprecedented times," Brotman continued, noting the world's lone superpower is also its biggest debtor, and are faced with a war against terrorists against whom conventional weaponry has limited potency. Oh, and we're in the aftermath of a huge equity bubble.

"Nobody knows how all of this will play out," Brotman continued. "The same people who claim the dollar's decline is good would have been proclaiming that it was good if the dollar had strengthened in recent weeks."

I think the professor has a point.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to Aaron L. Task.