Anyone that follows the market has likely been watching the downtrend that the S&P 500 has been in since the January highs. While the index has repeatedly bounced off of support at the 200-day moving average (DMA), the 50-DMA has been a tough hurdle.  In recent weeks we've seen rallies fail just as prices have approached or even briefly traded above the 50-DMA. The result has been a series of lower highs and higher lows.

Following the bounce that equities have seen since last Thursday, the top of the S&P 500's short-term (and increasingly becoming an intermediate-term) downtrend has once again come into play. In early trading today, the S&P 500 has traded above its 50-DMA but hasn't quite been able to break out above its downtrend. The next few days should go a long way in helping to determine which way the market will ultimately break from this pattern.

Looking just at closing prices for the S&P 500 provides a much more optimistic picture. As shown in the chart below, after two lower highs since the January peak, the S&P 500 has not quite made a higher high, but it has broken the downtrend. While it may be tempting to take this upside break and run with it, a more prudent path would be to wait at least for confirmation in the chart above as well as an upside break above the mid-April highs.