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Good Monday to you. As we all can obviously see, the major indexes can't make up their minds on a very short-term basis. The volatility on the daily charts have been pretty extreme of late with only the contrarian view being the most profitable. If you haven't been around the markets long, a contrarian view is basically taking the approach of playing the game of opposites. To further elaborate on this very popular and useful market phenomenon, it's important to remember there's two sides to every trade.

Just because you buy or sell something doesn't mean everyone else is doing the same thing. As a matter of fact, when it comes to very short-term trading, if you have traders piling into an idea in one direction, there's often a reverse affect depending on who is sitting on the other side. What I mean by that is if a herd of people and their mothers decided to buy a particular stock at a certain point in time, and a fund who owns an extremely large stake in the idea decides they think the opposite of you, there's a good chance the stock can go down, even though it appears on the surface everyone is rushing to the gates to buy.

However, if the masses pile in and the larger stake holders also believe the idea has plenty of legs and more upside, that's when a stock can go absolutely parabolic, which is more often the case with small caps and even penny stocks compared to their larger brethren. Why? When it comes to very large cap ideas that have appreciated for an extended length of time, the big money has been in it far longer than you or I have, so they're often selling when most are buying. When a small cap idea is identified early on, big funds and large players know there may exist a tremendous amount of upside left in the idea, hence the term, undervalued, so the idea has plenty of room left to run.

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Good Friday all. So far, the markets are ripping this morning on the heels of yesterday's strong move into the close. Sellers spent the good part of the day yesterday getting the indexes to crack to the downside, but to no avail. We were in that camp with an open put options position, but have since closed them out this morning and taken our lumps. We mentioned yesterday if the QQQ's traded back above that $69.45, it was best to cover up. We followed our own advice. This market has been and looks like it will continue to be very resilient regardless of what the economic landscape looks like or the uncertainty surrounding the elections. It just doesn't appear big money is concerned about much, which suggests this market right now is either very technically driven, third quarter earnings are going to be much better than we all expect, or we're setting up stocks to fail on weaker than expected earnings.

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Now that was a Presidential debate. I'd have to objectively say, that's Romney 1 Obama 0, but there's plenty left to debate. I've got a strong feeling, this is going to get pretty good, as it appears you couldn't get two more polar opposites with Romney making an aggressive effort to takeover, while Obama is eagerly trying to convince America he needs another term for his plans to pan out. From body language to their positions on various issues, the sharp contrast is most definitely a sign of the times. The next three weeks will likely be excellent reality TV. All I know is whoever ends up winning needs to give every small business in America the opportunity to thrive and succeed. It's the backbone of this country and the backbone of capitalism.

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We ended up getting the reversal we mentioned yesterday suggesting stocks could be in a position to move lower. Even with the DOW's big early move yesterday, the top was still lower than any of the last two week's highs. Again this morning, the indexes started off on the bullish side, but as it stands right now, the DOW's top is still lower than even yesterday's, which is why the DOW's rounding pattern continues to be a bit of a concern to us right now. It's going to be interesting to see if the indexes can buck what we're seeing, which is absolutely possible considering the recent volatility.

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Good Monday to you. Hope your weekend was either very relaxing or action packed, however you like to spend time recharging your batteries. It's nice to see competent referees back in the NFL, that's for sure. However, competent refs or no competent refs, it's a heck of a lot more profitable and predictable to bet on companies than it is to bet on the NFL. Trust me, that comment comes from experience. As a matter of fact, horses are even more predictable than the NFL. Ha. Enough useless banter. Let's get going...

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