Yesterday's rally provides another bullish confirmation suggesting that the market is ready to move higher.

Tuesday's distribution day on the S&P 500 is concerning as it casts some doubt on the overall health of the market.

Several key momentum indicators that Deron Wagner follows are signaling that the market is approaching an overbought state. Further, all of the principle indices are approaching major resistance levels.

The market continues to demonstrate strength. However, all the major indices are approaching key resistance levels and appear to be overextended.

Despite the fact that the market put a buy signal in yesterday, there are still an ample number of quality short setups available.

It is quite possible that we could see a pullback in the Nasdaq but sideways/rally action elsewhere. Caution is warranted in this choppy environment.

There are several reasons for taking a conservative approach to entering the market on the long side, despite all of the positive action coming out of the market.

The market fell under selling pressure at key resistance yesterday. The uptick in volume that accompanied the selloff suggests that market bears may not be quite yet ready to relinquish control.

Although Deron Wagner expects a pullback in the market over the next several days, he still expects more upside over the next 2 to 4 weeks.

The market is clearly at an inflection point as there has been a battle between bears and bulls over the past two sessions. This battle has manifested itself in very whippy price action.