Stocks fell Thursday for the fourth straight day following the ECB’s failure to meet expectations of a plan to deal with the European debt crisis. Mario Draghi’s promise to announce “a set of unconventional measures to preserve the euro” sounded like more plans to have plans, and so the euro, stocks and commodities slid lower.

At Thursday’s close, the Dow Jones Industrial Average was off 92 points to 12,879, the S&P 500 fell 10 points to 1,365, and the Nasdaq was off 10 points at 2,910. NYSE volume totaled 824 million shares with the Nasdaq crossing 489 million. Decliners outpaced advancers by about 1.5-to-1 on both exchanges.

Despite disappointment over the ECB’s non-announcement of a plan to solve European debt problems, there was little impact on the technical outlook for stocks. The major exchanges all fell but are still holding above the breakdown levels discussed in the past four days. I suggest that if you are not familiar with the technical outlook that you review those reports, since it appears that the overall market’s power is waning. Unless the Fed takes action, a significant sell-off could be at hand.

Our studies thus far have been of the major indices. Today we turn to the Russell 2000, which consists of small-cap stocks and is therefore more volatile. That volatility sometimes magnifies technical signals that may be obscured on larger-cap indices. Therefore, it is a worthwhile exercise to refer to its basic technical structures since they often influence trading on the major indices.

Earlier this year, we identified a very obvious head-and-shoulders topping formation with a price objective of 724. It came close to reaching that target but was thwarted by a Fed injection of funds. Nevertheless, the call of a top was accurate and protected us from a significant decline.

Now the Russell 2000 is forming a descending right triangle — a formation that usually breaks to the downside. The support line of this triangle at 765 was tested by Thursday’s low. It was preceded by a break of the 50-day and 200-day moving averages. This is a bearish formation that is on the verge of a breakdown with a target of 710. The MACD is on a sell signal.

Conclusion: A late rally interrupted what appeared to be a “breakdown in progress.” Investors appear to be hanging onto the notion that the Fed will again come riding to the rescue of the bull. But it appears that Bernanke is reluctant to go into action with his diminished supply of ammunition. And so, today the focus is again on the Fed, and unless it pulls another weak rabbit out of its hat, we can look forward to the fifth consecutive day of selling.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.