In Deron Wagner's opinion the mixed price action and the sharp selloff of many market leaders nullifies the positive market internals.

Wednesday could very well hold the key to the next significant move in the market. However, due to sector rotation, Deron Wagner would not be surprised to see a lack of broad market participation in either direction.

It appears that money may be starting to rotate out of financial stocks. The sector appears weak as the XLF has been struggling to reclaim its 50-day MA.

The health of the Nasdaq is in question as semiconductor and other tech stocks are on the cusp of losing support.

The market appears poised to move higher despite the divergence taking place among the major indices.

Market leaders have been re-energized by the market's post earthquake resiliency. It is noteworthy however, that homebuilder and chip stocks struggled yesterday. This suggests a lack of broad market participation and sector rotation.

Tuesday's rally points toward another advance in the broad market. All five major indices face resistance at the three-day high.

The Nasdaq was the only major index to close below its 50-day moving average Monday. If the Nasdaq is unable to reclaim this key support level, the next significant move in the market could very well be lower.

Several short-term momentum indicators that Deron Wagner monitors suggest that the market may be over-bought. He would not be surprised to see at least a short-term pullback in the broad market over the next few days.

The market has shown resiliency since the devastation in Japan. However, a big test of how strong the market is should become clear over the next several trading days.