OK, that's to be expected; we discussed last week that a break would likely be a late break, not a fresh one. But what I didn't expect was the fact that gold would rally more than 15 bucks yesterday and barely get an honorable mention!

In fact, I even heard some guy praising oil's rise because it was the first time oil rallied with a strong dollar. What dollar was he looking at? Because it certainly wasn't the U.S. dollar, which was not strong yesterday. The dollar stopped right in the area it was supposed to. The question is whether it can continue to pull back or whether it will turn around and rally some more.

Before we get to the buck, though, let's look at the chart of gold. If you squint really hard and maybe pull out the high-powered microscope, you can see that gold crossed that short-term downtrend line (B).

The problem is that the head-and-shoulders neckline (A) looms right overhead. If gold can recapture that neckline in the next few days, the gold bears are going to have a problem. You see, a breakdown that has no follow-through is not bearish. Therefore, a recapturing of that neckline would mean that the recent break was exhaustive and not fresh.

Why is all this important? Because the dollar relative to the yen is important. I've shown the chart of CurrencyShares Japanese Yen Trust (FXY - commentary - Cramer's Take) vs. the S&P 500 several times now, so I won't show the relationship again, but I will show the chart of dollar/yen. When we last checked in I figured it would stop up around resistance, and so far it has. The question is what it does from here.

Note that low in the dollar/yen was the low in the stock market. If the dollar/yen cannot continue its rise, then the stock market's rally might also be in jeopardy.

Dollar/yen has a lot of support back at the 103 level, so for now I figure it should stop there. I think a breakout through 106 would be considered quite bullish.

So far, the stock market is correcting in a perfectly mild fashion, which is to be expected. However, the 21-day moving average of the ISE call/put ratio has flattened out. Point A on the chart below is May of 2006, which was a peak in the market. Point B is the period from November 2006 through January 2007, which was not a peak in the market, just a prelude to the crashette of February 2007.

Point C is last July and point D is Nov. 1. So I'm sure you can understand why we should care if this indicator should roll over now.

For now, the market is in a corrective mode. However, if the dollar/yen comes down hard again and the ISE call/put ratio's 21-day moving average rolls over (among some other indicators discussed last week), I think we'd be looking at something more than a short-term correction.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.