NEW YORK (CNN/Money) - Sometimes what doesn't happen to the market is as important as what does.

What didn't happen Monday was the stark selloff that many traders expected. The news was bad: Any cheer that last week's rally had given investors was erased as Saturday's bomb blast in Bali rekindled terrorism fears. European markets were lower, stock index futures pointed toward a selloff in the U.S. and all those hopes that stocks had touched bottom for the year looked like they were about to be challenged.

Then the opening bell rang and it turned out all the worries were misplaced. Stocks took a jog lower, popped back up, flipped back and forth over the flatline and managed to finish the day in the green. No, Monday's 27 point gain in the Dow isn't going to grab headlines like the rallies Thursday and Friday did. But for some market watchers it was even more inspiring.

"The market had every opportunity to sell off," said Richard Dickson, technical analyst with Hilliard Lyons. "The fact that it's not going down is a good sign. I've got to give this rally the benefit of the doubt -- it should move higher."

One of the key indications of whether stocks are going to continue a rally is the way they pull back. No matter how auspicious the beginning, if investors send shares sharply down again at the first hint of bad news, the bull is likely headed for the meat-packing plant.

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If the first drop lacks power, however, that's good news: It suggests that there is a raft of investors who have been waiting for an opportunity to get in. Because they start piling in on the downtick, the pullback lacks depth.

"It's encouraging," said Morgan Stanley chief technical analyst Rick Bensignor of Monday's action. "I was certainly prepared for a down day."

Bensignor is bullish: he advised clients last Thursday morning that the market was setting itself up for "one of the best buying opportunities of the year." But he also cautioned that Monday's Columbus Day holiday introduced a major caveat into interpreting the day's action.

With the bond market closed, asset allocation trades between the fixed-income and equity arenas were left on hold. An investor, for instance, who wanted to shift money from stocks to less risky Treasurys in response to the attacks this weekend simply couldn't make that trade. Moreover, a number of major global markets -- Japan, Hong Kong and Canada -- were closed for the day.

Still, Bensignor is hopeful that the market may be forming a double bottom, a W-shaped pattern that can help put a floor under stocks. We could, he thinks, approach the high of 965 that the S&P 500 hit in August (the middle hump in the "W") by the end of the year. That's around 15 percent higher than where we are now.

Nick Glydon, technical analyst at J.P. Morgan, is less upbeat. Although last week's rally was cheering, he doesn't think it breaks the long-term trend down.

"You can't call this a reversal," he said. "It just shows that there's some hope we're not going into the October crash people feared. The market is still lower than it was three weeks ago."

One worry is that, as has happened so often during the bear market, all those happy buyers are about to meet an even larger group of sellers. There are a lot of investors out there whose positions are seriously underwater, and who will use any sharp rally to get out. Even after the crushing declines of the last few years, stocks account for roughly twice as much of household wealth as they did when the bull market began in 1982.

Jeff Saut, chief investment strategist at Raymond James, suspects that dynamic will eventually put a cap on the current move higher -- but thinks that first there's going to be more rally to come. One of the things he was hearing from Raymond James' sales force during the latter stages of the selloff was that individual investors were walking into brokerage offices and saying they wanted out of the market.

"Even in the hinterlands you had people come in and say, 'I can't stand it anymore. Liquidate,'" Saut said. When people get that negative, it's a sign that the market can't get much worse.

"Does that mean we entered a new bull market? I don't think so," said Saut. "But I think we've started a six-to-eight week rally that could take us higher than a lot of people think."