Good hump day all. We're continuing to get follow through weakness to the downside across all of the major indexes again today. Not good for those who don't read our newsletter, however, for those of you who do stay on top of it and entered into some put options on the index ETF's per our suggestion on Monday, you are nicely implanted in the money now. Yes, you can make money in a down market. If you acted on our suggestion, you're in an excellent position at this point to lock in profits and/or set a trailing stop and let the trade continue to work for you. Keep in mind though, when it comes to short-term trading, it's important not to be too greedy. 30%-40% options' profits at today's low over the course of a couple of days in a weak market environment is a lot better than a sharp stick in the eye, so always consider the profits and the timeframe before you make an attempt to stretch a single or a double into a homerun. What's good for your portfolio returns is good for us. Over the years, we've heard various rants from time to time that short selling is un-American, but let me just say, if it wasn't for the other side of the markets keeping investors honest and companies fairly valued, the markets would never be efficient, and that wouldn't be good for anyone. It's also important to understand there's always a way to make money in any market environment. I'd have to guess over 80% of the investing public believes they can only make money in a bull market. That couldn't be farther from the truth. In a bad market, put options can be an excellent tool to expose weak companies or a weak market as a whole, while still limiting your downside risk in the event you're wrong. I've never been a fan of straight shorting a stock unless you pretty much know there's no possible way you could wake up tomorrow morning and the Company in question has been bought out, or announce news that has completely changed the face of the Company for good. Biotech is a perfect example of a space I'd stay away from straight shorting because you could wake up one day only to find out Pfizer (PFE) has bought them, or they just received FDA approval. Not a good event for those who were short the stock. This is why we suggest generating profits in a weak market by exposing highly liquid ETF options. You are not going to wake up in the morning only to find out America has been bought out. Then again, maybe that's what going on these days with the falling dollar and a rising deficit. Ha. Just being a little cynical there. You get the point though. Additionally, by only participating in highly liquid options, you can be rest assured you are going to get, at the very least, a pretty fair price. It's a good rule of thumb to stay away from stocks and options that aren't experiencing enough volume to create a fair and orderly market for the stock. That's a big golden rule every investor should always remember. For longer-term investors not interested in short-term trading, a weak environment only poses a better opportunity to select good value plays for the long haul, often at a discount to what they've been trading at previously. For example, we've got three ideas sitting in the wings right now, which we've been looking to reveal, but continue to be patient hoping for lower entry levels while this market works itself out. However, I have to be honest... all three ideas have moved higher while the markets have moved lower this week! It's quite alright though. They will pull back at some point. All stocks do. Let me wrap up this part of today's commentary by making one thing very clear. If you lose money, we care and we care a lot, however, the markets as a whole will never care. It's a battle field and you've got to be a warrior. You have to have a strong defense, just as much as you need to have a strong offense. You've always got to watch your back and expose profits for the best interest of you and your family. Whether you crush it or lose dramatically, the markets don't care. For every winner, there's a loser, so it's important you do anything and everything you can to stay on the winning side of every position you take. So what can we anticipate from here? Last week we pointed to where the indexes would stall. This week, they stalled within just a few points of the numbers we provided last week. Now, we’re going to have to see where the markets start to find an underlying bid. As I type, the indexes are already trying to work their way back higher off a fairly brutal opening. A good sign, at least for the moment anyway. We pointed out yesterday that if the S&P 500 could get back above the 3X3 DMA within three days of being below it for the first time, that might suggest more upside for the rest of the year. However, that remains to be seen. If and when it happens, we’ll let you know. The VIX, which measures the level of volatility across the major indexes, has moved higher in recent days, exactly as we suspected. This is where big money is going to either start using these lower levels to position themselves and take the market higher, or simply use the recent strength as an opportunity to shed positions going into the end of the year. We’ll know soon enough. There's an awful lot of uncertainty out there, and they say the markets never like uncertainty, however, I've seen Wall Street climb a wall of worry on more than just a few occasions, so just like I stated above, it's important to stay on the right side of the markets and realize anything can happen. Very long-term investors need not worry with what's going on out there right now, just my opinion. Even if the indexes fall apart taking out the summer's lows, which I doubt is going to happen this year, that still would only get us excited for the long haul. In order to beat the index averages and generate returns far above what the rest of the investing world is accustomed to, you've got to be a bit of a contrarian. Buy when there's blood in the streets and sell when everyone is gloating over their success. As for all of the recent economic data and the fiscal cliff rhetoric, get used to it, but don't let it sway you're long-term thinking. I firmly believe the markets are going much higher before we ever take out the lows, if ever. I wouldn't let all of the doom and gloom fear mongering out there get the best of you. Lastly, Rich J., if you're out there, which I'm assuming you are, you emailed us asking us to elaborate on what a 3X3 and a 25X5 DMA is, you didn't provide us with an email address to reply. You filled out the contact form but never provided your email address. Here's a direct link for you or anyone else for that matter who wants to learn more about DMAs (displaced moving averages). Hope this helps: http://www.smallcapnetwork.com/Answer-to-Charting-Question-New-Idea-On-Deck/s/article/view/p/mid/7/id/1039/. Have an excellent afternoon.