Here is a chart posted by one of our bright graduate students at Golden Gate University.  It is a weekly chart of the S&P.  Readers will remember that weekly bars are used for very long term trading systems, and we used a weekly system in our study of the Dow (Sacred Chckens, the Holy Grail and Dow Theory).  The student is speculating and is aware of it.  He has correctly identified a candidate Basing Point  (short) in the SPX.  While it is not impossible that the formation is a bear flag (and time will tell) we still prefer to look at it as a bottom of the down wave.  It may also be a rally or upwave against the downwave started April 26.  The next chart down may give us a hint as to the next development.

When we look at Friday’s action we see two things — a price exploration down looking for confirmation — not found– and volume which looks a climax.  If these hints have any significance we should see some upside next week.  If not we’ll have to get a new crystal ball.