That was one of the best Monday Night Football games I've watched in quite some time. Looks like the Giants and the Redskins are developing an exciting new rivalry with RG3's splash entrance into the NFL and Manning's unwavering professional demeanor. What a game. Yes, I know this newsletter is all about stocks and the general markets, but when you publish an edition every single trading day without fail, finding new ways to open the commentary and keep things entertaining can sometimes be challenging, especially when the markets are simply cooperating with our analysis and not a whole lot is changing with our forecast. I've never really thought of us as weather forecasters. When you think about it though, that's exactly what we do is call for rain or sunshine for the markets, and right now, we've got rain in the cards with a potential storm brewing. The big question still remains if this is just a small storm passing through, or is there a bigger one sitting just off the coast that's about to work its way on to Wall Street, and subsequently Main Street? One thing's for sure, we're going to give you the most objective and timely forecast we can possibly provide you with from one day to the next, in addition to individual ideas we believe will well outperform the rest of the markets. For those of you who've been following along for quite some time, I think we've proven our forecasting to be among the best. However, when it comes to stocks and the broader markets, it's all about what have you done for me lately, right? Money never sleeps. As for individual ideas, I've got one I'll point out below, but the trade is only starting to develop, and hasn't confirmed itself just yet. That's the key to making money in the markets though, look down the road, not in the rear view mirror. We'll let the media handle the rear view mirror, while we focus on the road ahead. With that in mind, we're now getting the pullback we anticipated would start taking place once the indexes reached some important levels. Assuming you've been keeping up, the S&P 500 and the NASDAQ both have moved toward their most critical retracement level since the rally started back on the 16th of November. As we suspected, the indexes moved lower after gapping up to start the week yesterday, and are continuing to follow through so far this morning. If you got long some index put options per our commentary yesterday, you're likely nicely in the money today. Keep a close eye on that position though because it's important to remember this market is capable of just about anything lately. Setting a mental stop just slightly below your entry might be prudent so that you are ensured at least some gains while continuing to expose your trade to much bigger gains in the event the indexes continue lower. As I type, the indexes have moved back to their 3X3 DMAs (displaced moving averages) on the daily charts. Since we've been talking about the NASDAQ so much lately, I'll provide a chart of the S&P 500 today. As you can see here, the S&P has run into a bit of a headwind to kick off the week. Nothing to get overly concerned about, at least not yet. The current weakness right now is very logical, healthy and was anticipated. You can see the index has pulled back to the 3X3 (blue line), but what happens from here is much more important. You can also see the 25X5 (purple line), which is a much longer-term displaced moving average, has crossed over the 3X3 in recent days, and that's a bit alarming. Longer-term trends are obviously much tougher to crack than short-term trends. The good thing is the S&P has managed to close above the 3X3 every single day since the beginning of the recent short-term rally. Even with the sharp intraday pullback we had last Wednesday, the indexes still managed to find themselves closing back above the all-important 3X3 before it was all said and done that day, which suggested another leg up and sure enough we got it. What we'll be looking for today and for the next week or so is if the S&P does end up below the 3X3, does it only stay below it for a maximum of three days before resuming its upward trend? If so, that will tell us there's room for the markets to potentially move higher. It's important to remember though, we may get a fair amount of volatility before the markets determine which way they are going to move to finish up the year. Like I said yesterday, it's possible the indexes could take out that confluence area I've also circled here again before they decide to trend lower. The bottom line is with the daily movement of the S&P continuing to stay above the 3X3 so far, the recent rally is still bullishly intact, however, we hit a critical retracement level yesterday suggesting it was time for a needed pullback. The risk/reward of being bullish right now just isn't there. Just how much the markets pull back is what we need to see before we're going to either suggest getting long or further shed positions and let the markets work themselves out. As of right now, we've closed out just about everything throughout the year with exception to a few positions. We're still long CRAY, ZNGA, FRX and RIMM, which are all up from our initial entry, some more than others. We'll continue to be patient with new entries until we determine if this market wants to give us further discounted pricing, or if it wants to start moving higher. I suspect if the S&P closes below the 3X3 today, there's still further downside in the cards. I mentioned above there was a potential trade setting up that hasn't confirmed yet. One of our readers, who I communicate with regularly, asked me what I thought about Autozone (AZO) a few months back. In short, he was asking if it was a good short. I told him it was too soon to tell. However, the Company reported double digit growth for the 25th consecutive quarter, and the stock is waning as I type. I've included a monthly chart here of AZO. If, and the big question is IF, shares of AZO close below the 3X3 this month on the monthly chart, it will have confirmed a classic double repo of the 3X3 (no pun intended with repo and the Company being an auto stock). A double repo is an extremely strong reversal indicator. Should shares of AZO close below its 3X3 DMA on the monthly chart this month, it may be worth a good short. We'll keep an eye on it and let you know when the month ends. While I'm at it, I'll point out something extremely important. Never ever try and jump the gun on a reversal signal until it has actually confirmed. That's a recipe for disaster. You're basically playing Russian Roulette when you attempt to enter early into an idea without any sort of context or confirmation of an idea. I'm going to keep this part of today's commentary out of the subject title intentionally because I do NOT want to draw attention to our current analysis of AZO among the masses. If this trade sets up, we want it to be a stealth like entry with no attention to it. That's all we'll say about it for now. We are not fans of shorting running stocks, however, when you can get a strong reversal signal confirm itself in a chart of a stock that has ran for months and months, that can get very exciting, so stay tuned.