Welcome back, folks. We hope you had a great weekend. What a wild start to the new trading week on Monday, huh? Amazon.com (AMZN) - already at new highs - gets upgraded just a few days before earnings, PayPal (PYPL) begins trading on its own, Greek banks re-open, and..... oh yeah, gold crashed to a multi-year low, and by default broke under some key support levels. Let's just start there today. Now What For Gold? Technically speaking, gold prices passed the point of no return on Friday by moving below a key floor around $1140 per ounce. It's a support level we've been talking about for quite some time now, as it was tested and verified as a floor back in November and then again in March. It looked it might even hold up as a floor again with this retest, but clearly that wasn't in the cards. The $64,000 question from here is, now what for gold? It remains to be seen if the whole gap is going to be filled, or if a partial refill will do. I do, however, think we'll get some sort of decent bounce from here if only because the market can't stand to leave gaps behind. We may even see a bounce back above $1140. After any bounce though, we've got a sneaking suspicion gold is going to get back its bigger downtrend and press on to lower lows. From here there's even less context to prop it up than there was before last week. As for the "why", you really have to go back in time and look at - and accept - how gold got to where it was in 2011. Just as a refresher, gold prices rallied from $975 in late 2009 to a price of $1940 by September of 2011 almost entirely on the premises that (1) a flood of cheap dollars was going to spur rampant inflation, and (2) rekindled currency wars were going to lead to a collapse of the currency exchange system altogether, leaving gold as the only "currency" that would actually retain any meaningful value. [Bear in mind we were still hearing the echoes of a recession then, and a bunch of people were still convinced we were going to be hurled back to the stone ages, socially and economically speaking.] The mania was so huge, in fact, that gold became a must-have fad trade, with prices going higher simply because they were going higher. Care to guess what never happened? I've voiced my "fad trade" theory before, to cheers as well as jeers. With gold now 43% below its peak price from 2011 though, my theory is looking better and better. Yep, what I'm saying is, gold's still in a tumble because there are still some people who've yet to unwind a gold trade they've only recently come to realize was an unnecessary hedge, and dare I say an erroneous hedge? Oh, the trade worked for a while, but as is the case with most manias, the right time to lock in your profit and go home with gold was when the mania was the strongest and nobody doubted it was going to last forever. That's the way things were in late 2011. The good news is, I really do think we're closer to a bottom than the top for the gold pullback. It could still be a while before a bottom - and I mean a good, long-term bottom - is made though; we've probably got to give up a fair amount of ground before we get there. I'm just saying the gold implosion is past the halfway point. Though I don't want to get into the target-setting game just yet, I will go ahead and put it out there.... now that the floor at $1140 is broken, the next technical context I see for a floor is back at $750 per ounce. And no, that wasn't a typo. At $750 you'll see where the tip of a wedge pattern formed in late 2007, and where gold found a floor in 2008. For what it's worth though, the Fibonacci retracement lines that John Monroe over at the Elite Opportunity has taught me so much about suggest $1013 could become support... seemingly out of nowhere. The X-factor in all of this, of course, is the U.S. dollar, which looks like it's already at the beginning of a renewed long-term uptrend. It's pretty incredible actually. The greenback shouldn't be able to move any higher from an overbought/oversold perspective, but when I look at the currency, inflation, and interest rate picture, I'm hard-pressed to find a reason the dollar won't move higher. Well, at least I can't find a good reason to think it's going to move meaningfully lower. We'll talk about that another time though. For today I just wanted to show you gold's crazy charts and talk about what it likely means. The Weight of These Gains is Bearing Down As for the market, while the battle's front-lines didn't end up moving much today, I'd have to say the bears are still winning the battle despite today's slight gain. See, while stocks made some technical progress, they didn't make any meaningful progress. In fact, the bulls chickened out right when they got to the point where they were going to have to really stick their necks out. The fading bullish effort in many ways is more alarming than outright bearishness would have been. The chart of the S&P 500 tells the tale. We did make a higher high today, but it looked like the bulls backed off when we got to the 2134 area that would have meant a move into new-high territory. Could the sellers just be waiting to unload at that level? It certainly looks possible. At the same time, although the S&P 500 edged a bit higher, the VIX didn't mirror the move. The VIX also edges a little higher, hinting at a slight tilt towards a selling sentiment even if it wasn't mirrored by the market. Ditto (more or less) for the NASDAQ Composite. It inched a little higher as well, but clearly the buyers are hesitant as the upper Bollinger band looms near. The NASDAQ's volatility index, the VXN, also made a pretty decided upward move on Monday, moving back above a key line in the sand at 13.50. It's possible the VIX and VXN only showed us some upward pressure as part of a little post-expiration whiplash. Possible, but not likely. The tempered volume on Friday and today says what we're seeing from the market right now is a pretty good indication of what traders are feeling at this point, even if what they're feeling is indecisive. That indecision after a big rally, though, is a little bearish in itself. Today's bars look a lot like pivot (doji) bars... a pivot out of an uptrend and into a downtrend. I'm not really ready to commit to that call yet though. After the next decisive pullback, then I'll probably commit to that call. The great part about the next pullback from here is, whenever we get it, there's a fair amount of room to ride a bearish trade lower. But, let's cross that bridge when we come to it. The only thing we really need to worry about today is if or how we're going to play the next leg of gold's meltdown.