The S&P 500, Dow Industrials, and Nasdaq Composite are each in the process of completing a bearish "head and shoulders" chart pattern on their respective long-term weekly charts.

A positive reaction to earnings reports from Goldman Sachs, Bear Stearns, or Morgan Stanley in the coming days could potentially stop the market's slide in the near-term.

As this week's reports from Goldman Sachs, Bear Stearns, and Morgan Stanley may shed more light on the current state of the credit liquidity concerns, expect the stock market to be volatile on the heels of their earnings announcements. The combination of these earnings reports and anticipated light volume ahead of the upcoming holidays provides solid reasons to continue laying low with new position entries until the new year.

The price action in the S&P 500 over the past few days is a good example of how the mighty 200-day moving average often acts like a magnet.

Deron Wagner notes that only a few sectors, such as Oil and Pharmaceuticals, are still holding near their highs, while most other sectors are rolling over again.

Along with the breaks of moving average support, the S&P 500 also moved below support of its two-week uptrend line off the November low. Nevertheless, one day of heavy selling is too early to declare the recovery off the lows as being dead.

Deron Wagner reminds traders that the real reaction to Fed announcements is typically not seen until about one to three days after the meeting. Looking back at the most recent rate cut announcements, the initial afternoon reactions were quite positive, but the gains vanished only several days later.

Most financial sectors have not yet reversed their sharp downtrends. Until Deron Wagner begins to see money flowing back into sectors such as banking and securities broker-dealers, he will remain suspicious of how long the broad market's rally off the November lows can be sustained.

The potential bottoming action in the $SOX may create short-term momentum trading opportunities in the various semiconductor ETFs, such as the Semiconductor HOLDR (SMH).

Deron Wagner notes that the Gold/Silver ETFs and stocks also bear watching, as the sector could easily break out again.