Despite a 45 point rise from the SPX low set on June 6th, market breadth is just starting to rebound from oversold readings. This bodes well for the short term market outlook, as internals need at least a few more days to reach overbought levels:

The decline which started on May 22nd resulted in a steep downsloping channel whose upper boundary was tested on Friday. A continuation of the breakout should result in a retest of the recent high:

The weekly and monthly trends of the major averages were never challenged, and bulls remained in control throughout the decline:

As we've mentioned before, the seasonal outlook is for choppy trading until the end of August. So far the SPX is showing a 73% correlation to its weekly seasonal chart which can easily be accessed here, and an even stronger correlation with the bullish decennial cycle, which we mentioned in this column in January. At this point, we see no reason for these relationships to break.