Remember yesterday when we said we didn't trust Wednesday's rally as a sign of renewed bigger-picture bullishness? We hope you were listening to us. Today was a sucker-punch for stocks at a point when stocks didn't need any more problems. Perhaps even more troubling than that is how the market just squandered its best opportunity to recover relatively unscathed. We'll take our usual detailed look at today's meltdown in a moment. The first thing we want to take care of today is responding to an accolade one of our readers sent in last night. Luca writes: "Congratulations for your call on gold 3 days ago!" Thanks Luca, and thanks for bringing it up - we wanted to follow up on it. Yes, we were right, but I still don't think our call has reached an "irrefutable" or "unstoppable" level yet. The dollar was up a little today, although gold was up a little too (about a quarter of a percent) despite the dollar's modest 0.24% rise. One day doesn't make or break a trend, and I'm pretty sure we're on the right track here though. We'll continue to closely monitor our daily dollar/GLD chart below though. We'll just add how if the U.S. dollar index makes another close under Wednesday's close of 85.30, that should pretty much seal the deal. I don't see much on the near-term horizon that could put the greenback back into a bullish mode. On that note... The chart you're about to see below is one we've seen before, but it's a chart we could probably update every day and it would never get boring. It's a comparative look at the stock market (using SPY as the proxy), the bond market (using TLT), and gold (GLD). In a perfect world, one or two of those three instruments should theoretically always be rising, and one or two should always be falling. There may be exceptions to that dynamic from one day to the next, but overall, traders view those three vehicles in an either/or light. This chart also adds data that has implications for stocks, bonds, and gold. That is, we've added bond yields and the U.S. Dollar Index. Between these five charts, not only do we know what the market is doing, but we can get a good grip on why things are happening the way they are. Well folks, read 'em and weep. Assuming the stock market is going to go ahead and melt down [more on that below], the dynamic says either gold or bonds if not gold and bonds should be on the rise. Interestingly, bonds didn't do all that well today either, losing about 0.4% of their value. I have to believe at least some of the strength we saw from gold today was just because there was no other safe place to park investment dollars. Remember, the dollar was up today too, but gold and the sawbuck don't usually move in the same direction. The big question here is - at least the one I'm asking to myself - is gold apt to be pressured higher because stocks are weak and bonds are a question mark, or is gold going to be prodded higher because the dollar is poised to fall (or both)? It's a bit of a conundrum because, though it's a loose relationship, the U.S. Dollar Index and bonds tend to move in the same direction. If bonds continue to move higher (as the current trend is pointed), that won't make things easy for gold. And if the dollar moves higher, that definitely won't be good for gold. Yet, the tendency is for bonds and gold to move in tandem. For gold to really rally well from here, gold and bonds need to do the unlikely thing and go their separate ways for a while, and the stock market needs to remain weak. Alright - sorry for the verbose philosophy there. There's just a lot going on with this chart, and that means opportunity. We'll revisit it as necessary. Or, we can do the much simpler thing and simply keep close tabs on the gold futures chart, and buy it when the commodity breaks above the fairly important $1240 level. Conversely, we'll bail if the floor at $1183 fails. Now, let's get on with the discussion of the stock market. Pow! Right in the Kisser. All joking aside, the best way to describe Thursday's action is as a reversal of the reversal. Unlike all of the bearish plunges so far though, I seriously doubt the bulls are willing and able to step in this time and do some damage control before the selling gets out of hand. They've been punished twice for doing so over the past week and a half, and it just seems unlikely the optimists are going to stick their necks out for a third time, in fear of getting punched right in the face for it. On the flipside (and this is the part that's driving me nuts), the S&P 500 still has a potential technical rebound point. It's the floor at 1926. This is pretty much where stocks bottomed out today, and it's where the index bottomed on Wednesday and last Thursday as well. There's something about that level, and we have to respect it. Don't misunderstand. My guess is, the market has spooked enough people now that we have to go ahead and complete the capitulation process that we'd been able to sidestep for a couple of years now. I'm just saying, in the interest of looking at things with an unbiased view, that's something the bulls could work with if they felt like putting up a fight tomorrow. My expectation is still a bearish one based on the chart you're about to see.... the weekly chart of the S&P 500. Yes, this is the same chart we've looked at a couple of times the past couple of weeks. As time goes on though, it gets more and more dire. Once the long-term support line broke down last week, things just haven't been the same in terms of bullish willingness. The big obvious change on this chart today, though, is how the VIX has finally punched through its ceiling around 17.6. With nothing nearby to hold it down, it may need to race all the way to the 21.50 area before being halted. I shudder to think of the impact that could have on stocks in the meantime. I'd also be short-changing you if we didn't give you the updated chart of the Russell 2000. It was pretty well gone already, but if there was any doubt it was beyond hope/help, today's 2.66% dip from the small cap index should have wiped that doubt away. So where is the bottom going to be? I've got some ideas, but this is a situation where I'm going to refer you to the absolute expert on the matter... John Monroe, of the Elite Opportunity. While I'm good with momentum and direction, John's the master of determining the most likely spots where a trend is apt to stop and reverse. And yes, he's been talking about specific targets for a while now, focusing in particular on the Russell 2000 and the NASDAQ 100. I'm sure he'd be willing to name some comparable targets for the S&P 500 and the NASDAQ Composite though, if asked. If you want to know where the bleeding is most likely to stop (now that it's started in earnest), I strongly suggest you check out the EO service. In fact, now would be the ideal time to use your two-week trial offer, as we could be at those downside target levels within a couple of weeks. You won't want to miss the trade-worthy bottom. Here's the deal. Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1