This last week the market was up, no it was down no it was up. We saw some big moves this week but at the end all three indexes gave us a weekly key reversal to the up side. They also gave us a higher low and higher high. As usual it does not matter how bad the news are or what we think the market should do based on the news we are bombarded with every day. All that matters is what the market is doing and at this point it is telling us it wants to go up. The U.S. Dollar continued lower and has more room to continue in that direction. Gold is trading in a range but is getting close to the up trend on both the daily and weekly charts - a break of that trend line would not be a good sign. At this point the trend is still up but we should be prepared to go short in case it breaks the trend. The more we look at the action this week the more convinced we are that a bottom has been put in and we are now at the beginning of another bull run. This does not mean we can't get another week like the past two and get another reversal this time to the down side, but there is no way anyone can know if it will so we have to go with what the charts are telling us at the moment.us at the moment.

This last week we started off Monday with battle that ended slightly positive following on from last weeks rally presumablty due to earning expectations for this week. One more push tuesday left the main indices for the market on Wednesday with small bodied candles with longer lower tails with the SPX closing just negative, and the COMPQX and DJ-30 closing just positve. Thursday saw progressivley longer lower tailed candles developing on the COMPQX and DJ-30 which closed slightly negative portending a bearish move down, whilst the SPX fought back with a last retest of resistance. This set the scene for fridays data and earnings to dissappoint and the market reaction was a quite clear selloff.

The Nasdaq Composite continues to trade in a downtrending channel making lower lows and lower highs and Fridays decline of 3.11% was on higher than average volume.

Both the Standard and Poors 500 and Dow Jones Indices broke down on Friday on stronger volume. The SPX made a lower high and we should now expect a lower low, lower than the 1011 July 1st low.  The Dow Jones Index breakdown had the highest volume of the month so far. We should see a test of the July 2nd lows and maybe a lot more than that. We should know by the end of the week if this is a more substantial breakdown or is just volatility bounces within a range.

This last week the markets bounced and although they have gone higher than we originally thought they would, they did it on very low volume.

It looks like they can continue higher but we believe they are very close to topping out. The charts have not given any signs that they are ready to roll over so we will be looking to the long side this week, but we will be booking gains early and will likely close out all long positions by Friday.

We are bearish and do not believe this move will get any legs but it is a short cover rally and we do not fight the tape. We will switch to the short side as soon as the charts tell us to do so. Conservative traders are best off staying in cash and sitting on their hands until this move plays out. If this is the beginning of a new bullish trend there will be plenty of time to get in on the trend once it is established.

Gold bounced but closed just under resistance and is more likely to go down than it is up at this point. We are still looking for a test of the 114 area before we look to the long side.

The U.S. Dollar came down all week but bounced right on the up trend support line on Friday. It is over sold now so a bounce this week is likely.

This last week we had anything but the normal quiet pre-holiday week that we expected and is the norm. The markets were flat and on very low volume on Monday but thats where the normal quiet week ended as on Tuesday the fireworks began. The SPX dropped 30 points on Tuesday and continued lower the rest of the week. On Thursday the markets reached new lows for this down trend and reversed closing the day almost back even. It looked like a bounce had begun but with the unemployment numbers coming out on Friday and a long weekend in the horizon buyers were hard to find and the market continued lower closing at new lows on Friday.

However, though the markets are now oversold this only really matters in sideways or slow trending markets and means absolutely nothing when the markets are in a bit of a panic. In that state they can continue to be oversold and can actually reach further oversold levels. On Tuesday or Wednesday at the latest the SPX will print a so called Death Cross pattern. The death cross will happen even if the markets bounce on Tuesday as the 50 day and 200 day sma's are slow moving averages.

1. It can continue lower to the 950 area on the SPX and then a bounce to test 1041
2. Or, it can start to bounce here and most likely move up and test the 1065 area (the intra-day low of the May 6).

This week started out moving up on Monday but quickly failed and continued lower all week. The indices did have a small bounce on Friday with the SPX bouncing near the lows made on the so called fat finger May 6th.

The move down may stall here for a day or two possibly moving up a bit, but the trend is down and the markets will likely close lower by the end of the week. All three indexes printed a full engulfing bear candle in the weekly charts and that as we all know is not a bullish sign. The Head and shoulders pattern is looking more and more like it will confirm. The only problem we have with it is that it will be a very crowded trade so if it does confirm it will include a lot of volatility with big moves up and down as traders panic on every move up causing it to jump up in big moves and then dropping big as the weak bears run out. We hate volatilty for swing trading.

The RSI is pointing up and is still above the half way point on the daily charts so we can expect continued bounces until RSI also changes to down within an overall continuing downtrend.

Gold closed the week out above resistance but looks tired and it closed with a bearish candle on the weekly charts, so it can still go either way in the short term.

The U.S. Dollar is looking weak and tested the 85.00 support area this week. a break of 85 will likely take it down to the 82.60 area.

This week the markets continued higher as we mentioned we thought they would in last weeks commentary. However we would not say it is full steam ahead. If we look at the daily charts we can see that the markets had a big up day on Tuesday on low volume, then they spent the rest of the week almost flat. The volume has been low for some time now so maybe this is the new norm, we will have to wait and see.  The volume was higher on Friday but the market was flat and traded in a tight range all day. After a big move like we had on Tuesday we like to see follow through on higher volume, we didn't get that this week. If the markets don't follow through early in the week, they will most likely move back down to test their 20 day sma's or depending on the momentum a test of the recent lows. All three indices are now overbought and are currently forming the right shoulder of a potentialy large Head and Shoulder pattern.

At this point the markets can go either way next week but we should get an answer by the close on Tuesday or Wednesday at the latest.

The short term trend remains up, so our watch list for this coming week will be on the long side with the exception of one inverted ETF however our finger is on the trigger with very tight stops in case the uptrend has run it's course.

Gold continues to look strong and broke up on Friday.

The U.S. Dollar broke below the 20 day sma and is  headed towards the 85.00 support area. We do believe it will bounce there, and the middle of the week also looks like a good time for it to reverse it's current direction.

This past week  the markets started out breaking down as we expected but on Tuesday the 1040 area held on the SPX printing a short term double bottom. It looked like the markets would continue lower after Wednesday's close but instead they broke up. There was some news (or a rumor as we can not verify it) on Thursday that GS had purchased 1,000 contracts of the full SPX which started the short covering rally causing the market to break out to the upside and continue higher on Friday.

The markets are now poised to move higher but we will be looking for a lower high on a longer time frame than we had expected and much lower prices in the future. It may take a week or the rest of this month for this bounce to fail but we believe that the move down that started on April 26th going through this past Tuesday June 8th was simply the first leg down.

Gold (via GLD) moved up above the 120 area but failed to follow through and simply made a double top. If the 117.50 area fails on any move down gold will likely head much lower down to the 115 or even 112 area before bouncing and making it's real move back up.

The U.S. Dollar also printed a false break out above the 88.45 area and is now sitting on the 20 day sma. A break below will very likley take it down the 85 area before moving back up to new highs.

This past week the markets continued to move up and down with big swings in both directions. Volatility is the new name of the game and is no place for inexperienced traders. It is extremely important to have a plan in place as the market can move against you very quickly.

The move up on Wednesday was on very low volume and failed quickly on Thursday. The move down on Friday was on very strong volume, a whopping  45% higher on the DJ-30. We didn't hear any stories about some broker with fat fingers adding zeros to sell orders this time.

Friday's close was the lowest close since Feb. 8th on both the DJ-30 and SPX, the NASDAQ Composite had moved up the most so a new closing low has not been printed. However much of the gains are directly attributed to AAPL and it is now over bought and in danger of dropping hard. If AAPL closes below the 50 day sma currently at 250 it can easily drop down to 222 or even 200 and that will make the NASDAQ the leader on the way down.

This coming week we expect the market will continue lower, our open positions and the selections on our watch list are inverted ETF's. This move down is not perfect or easy to trade as a number of the indicators we use are showing a divergence with price, In other words they are pointing up when price is obviously pointing down, so caution is a must.

This week we changed the charts below and instead of the normal candle charts we posted line charts. The  pattern that has formed is much easier to see in the line charts. If you look at the SPX, DJ-30 and NASDAQ charts below you will see the M pattern that has been formed over the past two weeks. Most traders can identify the bullish W pattern, but it is not always as easy to see the bearish M pattern. Line charts only show closing prices so although patterns are easier to see they do not show the highs and lows of each trading day.

Gold has formed an ascending triangle, a break up should take it to new highs.

The U.S. Dollar has broken above the 87.45 resistance area and now has 91.60 in it's sight.

This past week we expected a whipsaw market as we mentioned last weekend and that is exactly what we got. It was not how we thought it would occur but the results where the same a little pain for both bulls and bears. We saw new lows but closed the week out flat to slightly up.

The reversal we got on Tuesday is a bullish sign, so the market will most likely move up or sideways for now, however we must not forget that unless the markets move above the previous highs of May 13 this is just a bounce in a down trending market. If the markets do continue up, we will be looking for a failure in the 1128 -1140 area on the SPX.

Traders buying long positions here will be going against the trend so tight stops should be used, as moves against the trend can and often do fail just as traders start jumping back in.

Gold is the only sector in a bullish trend and has the potential to move 10% - 15% higher. Caution and wide stops must be used when trading gold stocks as gold does not move like regular stocks and instead moves in big chunks in both directions.

This past week played out just as we mentioned we expected it to do, here in our weekly commentary last week. A panic move down, moving below the lows of May 6th then a quick reversal causing a Bear trap. Here is part of what we wrote for our subscribers in our daily commentary on Thursday night:

"...be careful as it is very possible we will get a false break below that low before turning back up. We doubt any bounce will come before Monday but you never know. On days like today it is very easy to get greedy and continue to hold positions for just a little more, but that is how profits are lost. We Tweeted sell prices for our positions during the day today and hopefully you all took advantage and sold a portion of your positions.  If not you should get another chance tomorrow at even better prices".

We are not posting these comments here to toot our own horn, but as an example of the type of information we give our subscriber's so that they can make better trading decisions. The Tweets are posted here in the lower left column.

The first ingredients for a new long term bullish market are now in place and if that is truly what is going to happen then we should start to see the next step which is a side ways market for the next few weeks or even months. Can you say Whip Saw?.  A basing market will move up and down creating a channel that at some point in the future will be broken.

If the markets start out this week like they did last week by moving straight up on low to normal volume then another failure and new lower lows, maybe much lower lows can be expected.

This coming week the markets will most likely start out by moving up. It is too early to say if the move will continue all week or will turn back down by Thursday as we saw last week. Please keep in mind that we are in a confirmed short term down trend Friday's bounce did not change that fact.