Yesterday marked a big change from the pattern of the past few months. Since early May the market has not been able to rally until it was fully oversold. Yesterday, the market rallied despite still being overbought. If the bears don't get this market down quickly than it will mark the first time since April that the bears have not been able to make significant progress with an overbought reading.
With the overbought reading still being in place I would be surprised if the bulls could make much more progress this week. But it will be a victory if they could defend yesterday's low. Than they will be heading into the turn of the month with an oversold reading and the first opportunity to start making higher highs.
Hedge funds have de-risked, the II survey shows entrenched bearishness and Rydex traders are positioned bearishly. There is upside fuel for this market if it could somehow get going.