NEW YORK (TheStreet) -- Markets were extremely overbought last weekend and began to roll over last week right on schedule.
We are well off those overbought readings now and are setting up for another round of strength as stocks work to complete bases.
From what I see there is nothing that tells me we are in for anything more than a small consolidation period, not any sort of major correction.
We are still in a fantastic market for swing trades of a few days or more.While many stocks still need a bit of time to complete major bases that will take them much higher, and quickly, we have been picking up nice gains of $10 or $15 in short order and booking those gains before consolidation occurs. These swing trades can really add up while we wait for the major buy-and-hold signal. Gold had a decent week but is still not looking good. I had quite a few emails telling me I'm going to eat crow on my call for lower gold, and that is fine. I never profess to be correct all the time, that is what stops are for. That said, I still think gold moves lower. Let's take a look at the charts. Gold gained 1.93% last week. I really see this move higher as being on the back of the fighting in Iraq and nothing more. I imagine it is a buy-the-rumor, sell-the-news type of move. If the U.S. does help out over there then chances are high that gold will sell down. Gold is still forming a bear flag or rising channel, which most times will break to the downside. There is so much horizontal chart resistance and the 50-, 100- and 200-day moving averages are all hanging around $1,300 making that area very tough to overcome. I do not see any reason why gold can move above $1,300 at the moment, but if it does then I will quickly change my stance to a more positive one. All I do is tell what I see in the charts, and it is very often correct. If I am proven wrong I have no problem admitting it and changing my view. I am not biased at all one way or the other except for what the charts tell me. I did note to subscribers Wednesday evening that many mining stocks and related ETFs had a strong day and that it could mean some strength for gold, and that is what happened.