Despite the positive numbers being posted by the major indices, the market seems to lack broad conviction.

The light volume and end of day selling on Monday muted what could have been a very strong day on Wall Street. Now Deron Wagner suggests caution due the overall lack of followthrough in the broad market.

Deron Wagner expects to see further buying in the market, with emerging market ETFs being one notable exception.

For the past three days the broad market has been consolidating in a tight trading range near the 52-week highs. Nightly research showed long entries to be abundant. The market appears primed for another advance.

Based on today's price and volume action, the odds now favor further upside. Nonetheless, rotation continues among ETF categories so there are pockets of weakness.

The past three days have reinforced Deron Wagner's opinion that profits should be taken quickly.

Over the past several sessions it has become increasingly difficult to identify quality long setups. For the moment, it appears as if the market is positioned for further selling.

After a big market reversal, Deron Wagner prefers to short weak ETFs into a bounce rather than chase them on the way down.

The market continues to plod higher but without broad participation. There is clear evidence of money rotating among sectors.

In this trading environment, Deron Wagner is inclined to hedge by establishing both long and short positions.