Gold prices have tumbled lower in the last three months. The spot market is off from above $1,000 an ounce to $870 an ounce today. Of course the Gold Trust (GLD) is lower, too, from near $100 to about $87.

Some of my new readers from the Forex Factory might be interested in following the unwinding of the gold bull market. Gold is very much the anti-dollar. Gold tends to trend higher when the dollar weakens. Alternatively, gold tends to trend lower when the dollar strengthens. With this relationship in mind, it's worth tracking the short-term bear flag in gold over the next few days as it relates to the forex market in general and the greenback in particular.

The Financial Select Sector SPDR (XLF), which is an exchange traded fund that tracks the broader financial sector, is forming a bear flag. The XLF is close to breaking down from the bear flag today.

You probably know by now that the financials have been lagging the market over the last six to nine months, although the group did stage a big bounce since mid-March. Still, financials are at risk of further downside which, in turn, puts the broader market at risk of the same.

A breakdown in the XLF from its bear flag could drag the Dow Jones Industrial Average and S&P 500 lower. Keep the XLF on your radar even if you're not going to trade it.

Garmin (GRMN) has seen its better days. The stock more than doubled in 2007. But so far in 2008, it's done nothing but drop. GRMN is trading near two year lows today.

The company reported earnings that fell short of estimates. The news caused the stock to breakdown from a classic bear flag. The short-term ascending channel, which has been in place since mid-April, served as the flag for the set-up. Within the context of the downward trend, the short-term ascending channel serves as a nice action point into bearish positions once the channel is broken.

Google (GOOG) has had a tough year, dropping from about $700 all the way to near $400. There are many reasons for the drop in the once mighty GOOG. The Microsoft (MSFT) and Yahoo (YHOO) merger worried many long-time GOOG bulls. But even more worrisome has been the drop in GOOG's paid click advertising.

We spotted the weakness in GOOG well before the news.

GOOG has rebounded over the past five weeks after dropping to a 52 week low at $412 in mid-March. The stock is climbing higher in an ascending channel, with upward sloping support and resistance. This recovery is a classic prelude to a bear flag, a bearish continuation pattern that, if confirmed, could take GOOG back down to its 52 week lows.

A breakdown from the bear flag will most likely take more negative news, either in the form of a completion of the MSFT/YHOO merger or in the form of more negative news concerning GOOG's online ads. There is, however, a chance that GOOG could breakout from its channel, and trade higher to above $500.

The market is close to confirming a 123 bottom or breaking down from a bear flag. The conclusion to this confluence of patterns will dictate trading over the intermediate-term.

The market has spent the past six sessions trading in a very tight pattern. The Dow Jones Industrial Average ($INDU), for instance, has been gyrating around the 12,600 level, plus or minus 100 points.

Sticking with the Dow as a measure for the broader market, it has rallied by about 1,000 points from the mid-March low. The Dow has done so in a very tight, aggressive, short-term ascending channel. This channel serves as the support and resistance for a bear flag. A breakdown from the bear flag would be defined with a drop below 12,500; confirmation of the bear flag would come on a drop below 12,200.

Meanwhile, the March low is higher than the mid-January low, keeping the prospects for a 123 bottom alive. Horizontal resistance is clearly defined in Dow at 12,750. (You can find other well-defined resistance levels across other broad market averages.) A breakout above resistance would set the stage for a big rally.

One of the two patterns will probably break by the end of the week. Look to get defensive if the Dow breaks down from the bear flag. Alternatively, look to get bullish if the Dow breaks out above horizontal resistance, confirming the 123 bottom.