Between another batch of political turmoil and a less-than-confident undertow to begin with, stocks were brutalized this past week. Though it wasn't the biggest weekly loss of the year, that's not saying much – we've seen some unusually large setbacks this year.

The biggest fear at this point is that this will turn into something more, dishing out another dose of panic that inflicts more damage than we've suffered so far. The S&P 500 has put (and maintained) some serious pressure on its lower 20-day Bollinger band, and has broken back below most of its key moving average lines. There's been quite a bit of volume behind the selling effort too.

We'll detail it all with charts below, but first, let's run down last week's and preview this week's economic data.

Economic Data

It was mostly buried by all the political rhetoric and the market meltdown, but we also got a small amount of economic news last week that merits a closer look.

First and foremost, though there's no chart, the Federal Reserve did end up cranking the Fed Funds Rate higher, to the tune of a quarter of a percent. The target base rate now stands at 1.62%. More important, new Fed chair Jerome Powell is picking up where Yellen left off, maintain a modestly hawkish stance that actually bodes well for the economy. The fact that the announcement didn't rattle or shock investors is a good thing.

The highlight of the week was home sales for February – new and existing. Existing home sales reached a pace of 5.54 million, topping expectations, while new home sales fell a little bit (and missed expectations) to an annual pace of 618,000. Still, the overall trend is encouraging.

New and Existing Home Sales Charts

Source: Thomson Reuters Eikon

One noteworthy nuance in the data…sales of new homes are lagging, and it's not really a lack-of-inventory problem. This suggests that while the construction market may not be red hot, the mortgage market is doing just fine despite rising interest rates.

Everything else is on the grid.

Economic Calendar

Source: Briefing.com

This week will be a little busier, but only a little. The highlight will be Tuesday's report on consumer confidence from the Conference Board. Despite plenty of volatility and turmoil, consumers have shrugged off the red flags and continued to grow their optimism.

Consumer Sentiment Charts

Source: Thomson Reuters Eikon

On Wednesday we'll get the third and final reading for Q4's GDP growth rate. It's unlikely to change much (if any) from the second reading of 2.5%. Whatever the case, it's a firm number, and points to sustained earnings growth that coincides with a bull market. The time-based arguments that the bull market is nearing an end ignores the fact that most bear markets coincide with shrinking earnings and weakening economic growth.

GDP Growth Charts

Source: Thomson Reuters Eikon

Index Analysis

Like last week, we'll begin this week's look at the market with an examination of the weekly chart… just to put things in perspective. As you can see, last week's loss for the S&P 500 ended up being the biggest weekly loss more than a year.

S&P 500 Weekly Chart, with VIX and Volume

Source: TradeNavigator

Scary? Sure, though a little less scary knowing these emotionally-driven stumbles haven't lasted very long (or not at all), and knowing the 200-day moving average line (green) was the perfect support level it was supposed to be. The bears were willing to drive the S&P 500 all the way to it, but not one scintilla below it.

S&P 500 Daily Chart, with VIX and Volume

Source: TradeNavigator

This time is different, however (and despite the inherent dangers of uttering those words). Namely, this time there's a lot of volume behind the selling, and this time, the VIX has pushed its way above its 20-day Bollinger bands without surging to multi-week highs that tend to coincide with a market bottom. There's still room and reason for the VIX to continue trending higher, which bodes poorly for markets.

All the same, the sheer speed and size of last week's meltdown sets the stage for a dead-cat bounce… a bounce that the bulls may end up trying to do something with.

Our M.O.? This is a scenario where you can assume nothing. Rather, the smart-money move is waiting to see how this all pans out. When investors realize the world didn't end this weekend and that the political uproars from last week were more bark than bite, we'd be surprised to not see some bullishness unfurl. It's just a question of how much. A lot of people thought the February rebound would go somewhere, and it didn't, despite the fact that March is usually a pretty bullish month.

April is usually even more bullish than March is though, so that's working in favor of the rebound thesis here.

Yep, there are a lot of opposing ideas here, underscoring the sanity of a "wait and see" approach.

For the record, the NASDAQ Composite more or less looks the same as the S&P 500. There is one difference though – the composite isn't yet testing its 200-day moving average line as support. Traders might, MIGHT need to see it tested before mentally allowing it to form a bottom. And, like the VIX, the VXN isn't exactly at a major peal that coincides with a major market low.

NASDAQ Weekly Chart, with VIX and Volume

Source: TradeNavigator

For the record, if the bears do somehow maintain control and push the market over the edge in a bigger way, the lower Bollinger bands on the weekly chart become the most likely floors for both indices. That would be roughly a 16% correction for the NASDAQ, and a 14% pullback for the S&P 500. The irony? Those are actually the typically-sized corrections investors forgot they saw on a regular basis prior to the unusually persistent bullishness that took shape about three years ago.

Whatever the case, as scary as things might feel if and when things got that ugly, that kind of pullback would be a great buying opportunity in light of the bullish economic backdrop.

We'll talk more about that (and valuations) if the need arises. In the meantime, just keep close tabs on all the lines plotted on our charts above. The indices should be bouncing off them for a while.