Yesterday was a good first step toward restoring market confidence.

With the market in "oversold" territory at the moment, Deron Wagner could easily see a quick two to three day reversal to the upside, so it is a bit late to establish new short entries here. As for the long side, we are forced to lay low until market conditions improve.

If there was indecision going into last Friday's session, one benefit of the sharp sell-off and breakdowns below key technical levels is that we now have a clear sell signal in the market.

Deron Wagner's goal with every rally is to always believe in the uptrend until the market gives us a clear sell signal.

The broad market continues to show signs of weakening. Nonetheless, one big "accumulation day" (higher volume gain) could change the complexion of things quickly.

Overall, yesterday's price action was concerning. The late session sell-off was typical of bearish churning.

If the market remains strong, Deron Wagner wouldn't be surprised to see another day or two of modest selling. This type of price action is probably needed for setups to form and for the market to build a proper base for another possible move higher.

Overall, last Friday's market activity was uninspiring, but could be expected following a three-day rally off the recent lows. We would also not be surprised to see a pullback Monday.

Stocks with relative strength continue to break to new highs, which is a bullish signal.

Based on yesterday's market performance, we are now one step closer to having a full-on buy signal for the broad market.