The Nasdaq is still technically in rally mode because it held above its prior low.

As ugly as Wednesday's session was, the sell-off did not drive the main stock market indexes below their recent lows. As long as the S&P 500 manages to hold above the 1,240 level, there's still hope stocks will move higher, at least in the near-term.

It's way too early to tell if yesterday's broad market rally will fizzle out in a few days, or if it was possibly the start of a significant bottom.

Deron Wagner likes the idea of a portfolio that is hedged on both sides of the market at this time.

Deron Wagner notes that as institutional money rotates out of leading sectors, there is recent interest in the relative strength and bullish chart patterns in the biotech and gold/silver sectors.

Two weeks ago, Deron Wagner noted money flowing out of top performing groups such as energy, and into some of the lagging groups such as biotechs. Confirmation of this came Wednesday, as the leading commodity-driven stocks of 2008 came under severe distribution.

Even though Deron Wagner now anticipates a near-term rally in the broad market, he expects nothing more than a tradeable, counter-trend bounce.

Monday afternoon's resilience of GLD and GDX suggests to Deron Wagner their multi-month patterns of failed breakouts and unpredictable opening gap downs are probably finished.

There are very few ETF trade setups Deron Wagner likes for potential entry right now. On the short side, he simply doesn't like the risk/reward level of entering new shorts. On the long side, he's interested in the newfound strength in the gold and silver sector.

Deron Wagner write that yesterday's blowout may raise the question of whether or not the stock market has reached a level of "capitulation," which occurs when stocks form a significant bottom after a massive series of drops. When stocks capitulate, the sell-off is typically accompanied by the largest volume levels of the entire downward move, but yesterday's volume levels failed to confirm.