The big question is whether Wednesday's bounce will develop into a substantial, new uptrend, or if the bullish momentum will swiftly fade, as has been the case with other rally attempts in recent months.

Now is a good time to start building a fresh watchlist of ETFs with relative strength, in order to be prepared for fresh buying opportunities if they arise.

Since stocks have merely moved sideways over the past five days, consolidating near their recent lows, odds favor an impending resumption of the downtrend from the August highs.

Friday's advancing volume beat declining volume by 10 to 1 on the NYSE and 7 to 1 on the Nasdaq. Overall, it was a bullish move for the market, although it remains in a trading range.

Deron Wagner continues to see a ton of relative strength out of the emerging market sector.

With yesterday being only the first day of a bounce in the U.S. markets, Deron Wagner prefers to wait at least a day or two to see if a bullish momentum develops off the lows.

After two weeks of choppy, range bound action, the major indices made a technically significant move yesterday, with a confirmed breakdown below horizontal price support levels.

Given the premarket weakness in the S&P and Nasdaq futures, stocks are likely to be under pressure on the open.

As Deron Wagner anticipated, the semiconductor sector remains weak. Consequently, the inversely correlated UltraShort Semiconductor ProShares (SSG) has performed well.

Since the major indices are still near the middle of their multi-month trading ranges, this is not the time to be heavily exposed on either side of the stock market.