Classic chart analysis pinpointed last week's market reversal. This week, the chart says we should see a trend develop.

SPDR S&P 500 (NYSE: SPY) closed up 0.48% last week. Weakness in the first part of the week pushed SPY down to the target from the head-and-shoulders pattern highlighted last week. Now a gap at $167.40 presents the next short-term hurdle for the market to clear.

Gaps can offer resistance and prices could move down this week if that is the case. If SPY moves up through the gap, we should expect additional gains.

During the past six weeks, stock prices have traded within a narrow range. A breakout should be expected soon, and many analysts will point to the bearish bias in the month of September to argue that the breakout should be to the downside. The Dow Jones Industrial Average has traded down 57% of the time in September since 1900, the worst record of any month in the year. June is the only other month to show a losing record with losses 52% of the time.

September is the only month where the S&P 500 has closed lower more often than it has closed higher, showing a loss 54% of the time since 1929. In the first year of a president's term, the S&P 500 has been down 62% of the time.

These are not tradable edges because there is no underlying logic why September should be bearish. A tradable edge could develop if a decline begins and prices fall below key support levels.

Long-term investors should look at any market weakness in September as a pullback in a bull market because the long-term uptrend remains intact. The monthly chart shows that we are in an accelerating uptrend. A break below the third trendline in the chart below would signal a reversal.

The lowest line in that chart marks the trend from the 2009 low. In late 2011, the trend accelerated, and a second acceleration started at the beginning of 2013. This is a common pattern seen as a bull market ages.

There is no way to know when the reversal will occur, but there is a way to see when the reversal becomes significant -- when the slowest trendline, the one that has been in place the longest, is broken.

Short-term traders looking to profit from what could be a shallow pullback should consider adding inverse ETFs like ProShares Short S&P 500 (NYSE: SH) to their portfolio if SPY falls below $163.

Gold Fully Recovers June Losses
SPDR Gold Shares (NYSE: GLD) was up 1.75% last week with almost all of the gain coming on Friday when the ETF rose 1.57%. GLD has now completely recovered from its June sell-off.

The pattern that has formed on the chart could be a triangle bottom with a price target at about $155, almost 15% above Friday's close.

A more likely scenario is that gold is near its short-term fair value and could trade within a narrow range for some time. Bulls should note that the World Gold Council actually showed supply outpaced demand by about 20% in the second quarter.

The supply of gold has been increasing while demand has been falling. Gold demand has now fallen to a three-year low, and without an increase in demand or a decrease in supply, the upside in gold seems to be limited.

Gold's surge on Friday was in response to news of potential weakness in the housing market. According to some reports, economic weakness will allow the Federal Reserve to continue adding $85 billion a month to the economy. That might be true, but Fed bond buying seems to have little impact on the price of gold in the short term. Traders should consider taking profits in gold positions.

This article originally appeared on ProfitableTrading.com
Market Outlook: Watch for This Signal of a Significant Reversal

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