SPDR S&P 500 ETF

That all brings us back to the index everyone's wondering about: the S&P 500. The S&P has been hard to read of late, thanks to a major pullback in the last month that's left many investors wondering whether it's time to run for the hills or start accumulating stocks again. The techincals tell part of the story, and the intermarket picture tells the rest.

Right now, the best way to get cheap exposure to the S&P 500 is through the SPDR S&P 500 ETF ( SPY), a $95 billion fund that owns behemoth S&P constituents such as Apple ( AAPL) and Exxon Mobil ( XOM).

For starters, the S&P got woefully oversold in May, resulting in the snapback rally we're seeing this week. The fact that stocks are bouncing off of previous support in the high 1270s helps make a case that this is still just a correction, not a crash-in-progress. In the chart above, it's clear that the uptrend is only decelerating for the first time now -- from trend line 1 to trend line 2 -- that's far from being broken altogether.

On the intermarket side, a pullback in TLT would support upside in stocks: we'd want to see demand get sapped from treasuries (a flight to quality asset) as investors ramp up their risk tolerance and throw cash back into equities. And a bounce in stocks makes sense with every other asset class story we've looked at. Don't run for the hills just yet - investors are looking at a buying opportunity in SPY.

To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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