Over the next few days, Deron Wagner will be keeping a close eye on whether or not the major indices manage to hold above their 61.8% retracement levels from their November lows.

Deron Wagner's basic short-term plan in the coming week is to wait for the main stock market indexes to retrace some of their recent gains and touch key support levels, then buy a few ETFs with relative strength.

While it's still too early to confidently call a long-term bottom, Deron Wagner now feels the market is setting up for a tradeable, intermediate-term bounce that could lend stocks a bullish bias at least through year-end.

Stocks have begun consolidating, giving Deron Wagner reason to believe there's a decent shop of another leg higher in the near-term. As such, he thinks it's probably a good idea to lay off any new entries in the UltraShort ETFs.

Many traders and investors may want to be liquid ahead of the holiday weekend.

If the major indices rally above their October 2008 lows and 10-day moving averages, expect the 20 and 50-day moving averages to provide significant resistance.

In terms of a reward-risk ratio, new longs at current prices, around support of six-year lows, make sense to Deron Wagner. But it makes more sense to wait for the major indices to rally into resistance of their 20 and 50-day moving averages, then initiate new short positions

Investors with a 401k or other long-term account may find a bit of comfort in knowing the major indices are nearing major support of their year 2002 and 2003 lows.

Deron Wagner concludes that technical analysis indeed continues to work very well, even in this erratic environment, but one of the biggest challenges has been realizing a profit on trades that are held more than a day or two.

The charts of the Short and UltraShort ETFs have been a sloppy, choppy mess, with no ideal entry points right now.