What a difference one day can make. Through the first three trading days of February, it looked as though the stock market was attempting to form a short-term bottom.

Whether or not the gains of another wave up would be sustainable is too early to determine, but it may be dangerous to start getting aggressive on the short side right now.

Deron Wagner has found it quite possible to simultaneously profit from both long and short positions, particularly when the broad market is indecisive or in transition. The key is to make sure the long position is showing great relative strength, and the short position is showing clear relative weakness.

In the near-term, Deron Wagner's general plan is to sell long positions into strength, locking in gains as the major indices run into overhead resistance.

Even though extensive selling has occurred in a short period of time, the current technical picture of the S&P 500 merely resembles its pattern from mid-June to early July of 2009.

Until the major averages reverse back above the hourly downtrend lines, the path of least resistance remains to the downside. Further selling in the S&P 500 could lead to a test of the October or November lows around 1,030.

Deron Wagner will continue to closely monitor the stock market's price to volume relationship in the coming days, in order to determine whether or not a short-term bottom may be forming.

Today's busy news agenda certainly has the potential to move the market.

If the pullback in the broad market fails to recover as quickly as other retracements have done, and stocks enter into a more protracted, intermediate-term correction, one of the best types of short setups may be found within ETFs that failed to breakout of bullish consolidation patterns.

With the major indices already in confirmed, near-term downtrends, Deron Wagner is now starting to monitor more of the inversely correlated short ETFs for potential buy entry.