For most of Wednesday’s session, stocks were hit hard as evidence mounted that the economy had slowed. But when it was reported that The Wall Street Journal’s monthly forecasting survey showed more economists expected the Federal Reserve to take further action, the market turned in the last two hours of trading. The Dow’s early losses were cut in half, while the S&P 500 ended unchanged.

At the close, the Dow Jones Industrial Average was off 49 points to 12,605, the S&P 500 was unchanged at 1,341, and the Nasdaq was down 14 points at 2,888. NYSE volume totaled 767 million shares, and 454 million shares traded on the Nasdaq. On the Big Board, advancers were ahead of decliners by 1.13-to-1, and they were even on the Nasdaq.

With just two hours of trading remaining on Wednesday, the S&P 500 reversed from its low of the day at 1,333 and closed essentially unchanged. This intraday reversal may not be the strongest bullish signal ever recorded, but it should give the bulls enough lift to challenge the two monthly highs at 1,364, and perhaps even 1,375.

The technical trigger is the crossing of the 20-day moving average through the 50-day. The 50-day moving average now acts as support at 1,336. A violation there would be a reversal down with the next challenge at the 200-day moving average.

The Dow’s mid-session reversal was not as impressive as the S&P 500’s. It closed lower than its 50-day moving average, and its support line is not quite as well defined as the S&P’s. But a reversal is a reversal. Even though the initial resistance will be at the 50-day moving average at 12,656, it should be easily overcome. If not, Wednesday’s action will be lost and the next test for the Dow will be at the 200-day moving average at 12,463.

Conclusion: Regardless of the reason for Wednesday’s surprising late-day turnaround, the bulls could be presented with a possible gift by the Fed. But the rally is tenuous and based merely on the supposition that the economy is so bad that a new stimulus will be forthcoming. However, most economists said that the Fed shouldn’t just stick with Treasury bonds, but include mortgage-backed securities as well. If Bernanke takes that advice, the market could reward him with a nice pop.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.