There is a lot of speculation that the Federal Reserve Board will make an emergency interest rate cut sometime this month. Such a move may initially yield a positive reaction from the market, but don't count on it sticking.

Because all of the major indices held their prior lows from August, we are technically still in the short-term uptrend that began four days ago.

Given that small-caps showed the most weakness during the first leg of the market's correction, Deron Wagner anticipates small caps will also be a downside leader if stocks head back down for a retest of the August lows.

The Nasdaq Composite may recover faster than the S&P 500, because less technical damage has been done to its chart.

Given yesterday's reversal, there's a good chance the bulls will retain control for at least the next week.

For the first time since the month-old downtrend began, market internals last Friday reached the kind of extreme levels that often precede a short-term bottom.

With strong closes in the market over the past two days, the time is not quite right to heavily add new short positions, but it's not wise to be loaded up on the long side either.

Until the market proves otherwise, the short side of the market carries a much better chance of profitability in the intermediate-term.

Deron Wagner continues to lay low, at least until he sees how investors and traders react to the forthcoming test of the 200-day moving average.

Now that a bounce has begun, Deron Wagner will look to initiate new short positions upon confirmation that the bears have resumed control.