Today's subject title is perfect for what just took place on the open this morning. For the last four trading days, we continued to point to the NASDAQ indexes to determine if we'd get another decent leg up in the market, and this morning we got the confirmation we were looking for, albeit one day late. It appears there's a fair amount of pent of demand to trap short sellers in this market and that's exactly what we're seeing today. Dating back to the day after the elections, we took a stand suggesting these markets stood every illogical reason to move higher on the heels of what many though was the beginning of a market meltdown. However, all we've seen since the markets hit bottom shortly after the elections is continued strength and a very resilient environment for stocks. Why? We'll point you to that post-election edition here titled, "Careful Throwing in the Towel - It's the Perfect Environment for a Snapback". You can go back and read our reasoning on the topic, but in short, where else are investment dollars going to provide any sort of a decent return other than stocks? Right now, the markets continue to express their carefree demeanor that they're really not too worried about jobs, the fiscal cliff, consumer demand, a housing recovery, or really anything of the sort. Not even waning third quarter earnings were enough to shake the big money tree enough into being scared. That's good. As long as Bernanke continues his monumental record stimulus accommodations, this is likely what we're going to continue to see. Savvy investors have no problem with the Fed "kicking the can down the road" (another Greenspan historical cliché). As long as we continue to pump billions into treasuries keeping the dollar around all-time lows (hence "a dollar short" in today's title), exports will likely continue to add some strength to our economy, and stocks will likely continue to be the investment vehicle of choice. Wow have things changed. We used to rely so heavily on imports and we were the mass consumers of the world gobbling up everything like gluttons. Now it appears we're trending in the opposite direction. Don't get me started on what I think this is all going to potentially do years from now, but at this point when it comes to stocks, it really doesn't matter, at least not yet. It's important to remember the trend is your friend. Just how long this trend will last is our job and we'll be right there all along the way to let you know if these markets start to appear as though they are in deep water. I suspect that's not going to be anytime real soon though. Economists don't predict growth will take off in 2013. Gross domestic product expanded at a 2.7 percent annual pace in the third quarter, according to Commerce Department data. Economists in a separate Bloomberg survey forecast growth of 2 percent in 2013. Do the markets care? Heck no. They care about generating returns and that's exactly what we're getting. Speculation is alive and well. Remember, stocks trade more based on supply and demand than anything else. You can take all of the fundamental reasoning right out of things sometimes, because if there's enough anxious money sitting on the sidelines, the markets are going to go up. The old adage, "don't fight the tape", is alive and well. And remember, contrary to what many believe, the Obama administration made the extremely rich even richer throughout his first four years in office. Sure, the little guy has continued to suffer, but the little guy doesn't invest enough in the stock market enough to move it. See my point? You read that last statement regarding the Obama administration correctly. If you look at the data, although he continues to preach his defense of the middle class, the data over the last four years revealed the strongest income growth among Americans was with the top 1% of the richest people in the country. Yes, the rich actually got richer and you can thank the markets for much of that. And, those are the 100 pound guerillas that move the market. It is what it is. So, if you continue to have a "feeling" that things aren't going well, I suggest you get rid of that feeling and start analyzing along with us, and keep your emotions out of it. There's plenty of money to be made in the markets for at least another few years, before we may end up having to face the music. As it stands right now, I think I know where this market wants to go before it potentially pauses for at least another short-term pullback. Keep in mind, this technical analysis is very leading in nature and highly speculative. However, if you consider what I mentioned above, now that the shorts are continuing to get rotated right out of their positions, today's strong move up suggests at least another day or two of this kind of activity to the point where we wash out that important confluence area I've referenced for a few weeks now. I've included a daily chart of the NASDAQ Composite below. It doesn't matter which major index chart you use though, they're all revealing pretty much the same thing with one exception, the NASDAQ indexes have yet to retrace their complete 5/8 of the selloff that started in September, while the S&P and the DOW have. That's the one glaring difference between the indexes, but remember, until proven otherwise, we believe the NASDAQ is the leading indicator. What that means is when the NASDAQ goes, so goes the rest of the market. Just because the S&P has mustered larger gains over the last month doesn't suggest in my opinion the markets are going to continue to go straight up even though the S&P has already broke above its 5/8 retracement level. Why? Because the NASDAQ hasn't yet. See the confluence area I've circled here? Contrary to popular belief, many old school chartists tend to think once a confluence level is broken from underneath, that it's cause for jubilation. However, if you've been a successful chartist in recent years, you know that couldn't be farther from the truth. What the markets love to actually do is gravitate to a level that washes out the shorts, signals an opportunity for longs to jump in, and then reverses course at a not so obvious logical resistance level proving everyone wrong except the savvy. With that being said, I suspect we'll break above that confluence area I've circled here and then test the 5/8 retracement level around 3049 on the Comp., which I've pointed to in the chart. Then, and only then, we may potentially reverse course in an attempt to catch many short-term bulls with their pants down and leaving short sellers frustrated. Breaking above that circled confluence area will likely signal shorts throwing in the towel, and bulls getting a little too excited too soon when in fact we'll be right up against a real logical resistance level that we can actually count on for a potential pull back. We mentioned options expiration taking place a week from Friday, so this would be the perfect opportunity to force all of those jubilating call options positions to start taking money off the table. Notice we haven't suggested getting short this market since we pulled back last week? As a matter of fact, we suggested covering up and standing aside when the indexes moved lower last Tuesday. However, should this market trade up above the confluence area I've referenced here, and start to display some weakness against that 5/8 retracement level, it may be a good opportunity to pick up some short-term puts in anticipation of a pre-options expiration selloff. We'll just have to see when these levels are hit. For now, you could even get long in anticipation of a test of the 5/8. There's still room for profit to that point. I will also point out in the chart of the Comp. a very pretty and classic reverse head and shoulders pattern shaping up nicely. It's actually so beautiful that it almost looks a little too good to be true. We've said it for a while, if this market is truly on the mend, we're likely going to see a fair amount of volatility in the process. The bottom line? We're approaching taking a short-term bearish stance, while we continue to believe the long-term bullish prospects for the broader markets are still intact.