Will last week's plunge turn out to be a failed breakdown, or will today's pre-market enthusiasm vanish just as quickly as it appeared? Who knows?

While yesterday's sell-off may have been bad news for traditional "buy and hold" investors, now at least traders know which side of the market will offer the highest chance of profitable trades in the near to intermediate-term.

Deron Wagner writes that the relatively weak Nasdaq could easily break down to close below its 50-day MA. If it does, the rest of the main stock market indexes would likely follow, perhaps all the way down to test their July 2008 lows.

Deron Wagner continues to reiterate the danger of putting much faith into the direction of the stock market until the major indices clearly show their hand.

As volume starts returning to the markets this week, new ETFs with relative strength and weakness on their chart patterns should start to emerge.

While firmly positive market internals indicate Thursday's buying was broad-based among most industry sectors, there was a notable lack of leadership among top sectors and individual stocks. Broad-based rallies in the stock market simply can not be sustained for long when they are led only by the weakest of all industry sectors.

Chart patterns of the major indexes, combined with much lower than average overall market volume, alert Deron Wagner to the possibility of overtrading and churning one's account.

The S&P 500 is clinging to support of its swing low from last week.  If it breaks down to close below that 1,261 level, Deron Wagner expects to see a surge of downside momentum because the short- and intermediate-term trends would swing to bearish.

Deron Wagner takes note of the precarious state of the broad market. With volume likely to remain light until after the Labor Day holiday has passed, stocks could very well remain range-bound throughout the rest of the week, or downside momentum could easily kick in ahead of the holiday weekend.

Deron Wagner writes that we probably won't see the real direction of the market's next move until traders and investors begin returning to their desks in the beginning of next month.