Deron Wagner's focus will be on ETFs with a low correlation to broad market direction, or at least specific industry sectors exhibiting relative strength (for long positions) or relative weakness (for short sales).

The S&P, Nasdaq, and Dow remain stuck at pivotal resistance levels. While it might be considered negative that the indexes have not yet been able to move higher, recent price consolidation could be considered bullish. The longer the major indices hold near the week's highs, the greater the chance of an eventual breakout to make another leg higher.

Since the major indices are still well below their June highs, a quick and easy way to spot ETFs with relative strength is to seek those which are already at or above their June highs. Such ETFs could be showing leadership, positioned to outperform subsequent gains in the broad market.

Now that the market's new trading range is becoming apparent, and substantial follow-through in either direction is unlikely, Deron Wagner plans to close existing ETF positions as they start to show a decent profit.

Quarterly corporate earnings season officially kicks off today, with the release of the latest numbers from Alcoa (AA) after the close.

In order for the bounce off the recent lows to be meaningful and sustainable, institutional accumulation will soon need to return to the scene. When fledgling recoveries lack the confirmation of higher volume, just one day of higher volume losses can easily erase several days of gains.

Because the major indices will likely have great difficulty moving back above their 50-day moving averages in the near future, Deron Wagner primarily views this counter-trend bounce as merely an opportunity to initiate new short positions with a better reward-risk ratio.

One of the few remaining charts that has continued to trend higher over the past few months, other than bond ETFs TLT and IEF, is the iPath S&P 500 VIX Mid-Term (VXZ).

It's quite reasonable to expect at least a very short-term bounce going into this week. However, in the intermediate-term, the major indices are actually poised for resumption of their downtrends that began in April.

When stocks have been selling off so sharply that they are in "oversold" territory, higher volume can actually be a sign of stealth institutional accumulation as the rest of the retail investors finally give up and sell their losing positions. As such, yesterday's higher volume losses could be viewed as a neutral to slightly bullish signal, at least for the very near-term.