Happy Friday, fellow traders. Of course, if you were hoping/needing the market to bounce out of trouble today, it wasn't an especially happy Friday for you. It's too soon to give up all hope though. As they say, it's darkest before dawn. Let's not beat around the bush. The S&P 500 broke below a key floor at 1926 today. On the other hand, today's beat-down suspiciously stopped at 1906, where the index hit bottom and rebounded in early August, and where the 200-day moving average line (green) is now. If there was a next-best place for the bulls to make a stand now that 1926 has broken, 1906 is it. I can't say I'm surprised. The 200-day moving average line is always a biggie, as are former lows. There's something else that partially points to a potential bounce from here. We don't discuss this very often, but volume surges are also pivot points for the market, as they often mark a grand, decisive flushout (or rush-in) of sellers (or buyers). Interestingly, today's volume was the highest it's been in months. Maybe it's nothing, but when we add the volume surge to the fact that the bleeding stopped right at a key floor on top of the fact that the VIX poked a key ceiling today, it really makes you wonder. Yeah, the VIX bumped into a major resistance line of its own on Friday. You can't really tell it from the daily chart above, but look at the weekly chart of the S&P 500 below. Although the S&P 500 seems good and comfortable below that key support level, you can also see how the VIX has had a problem pushing above 21.50 since early last year. My honest best guess is, we've not hit the ultimate bottom yet, but I do think we're at a place the bulls could use as a platform from which to stage a brief rebound effort. When all is said and done, however, it seems stocks have stumbled too much to not go ahead and make the whole enchilada, meaning the market doesn't "do" halfway corrections. It either completely sidesteps them, or makes complete ones. And for what it's worth, the Dow and the NASDAQ Composite both also closed all the way below their 200-day moving average lines today for the first time in a long, long time. It bodes bearishly. Bottom line: We're bearish in the near-term. Even if stocks bounce for a bit, the S&P 500 has a huge technical ceiling forming around 1970 where three major moving average lines are converging. Only a cross back above that level could force us to rethink the bearish stance. Again - and we can't stress this enough - a market correction isn't the same thing as a bear market. In fact, any further corrective move from here only makes the long-term buying opportunities better. As we mentioned to you on Thursday, the Elite Opportunity is our resident expert when it comes to figuring out where the bottoms are most likely to be made. You can check out where John Monroe thinks everything is headed by taking a two-week test drive too. Here's the deal. Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1 Rising Against the Grain While the overall market may be deteriorating with traders just waiting to see just how low any further corrective action could send stocks, I find it interesting - maybe even a little telling - to see which groups of stocks traders have completely turned their backs on, and which sectors traders have suddenly fallen in love with again. I've mentioned to you before how I have access to way to much market data, which is like giving drugs to a junkie. I don't care though. If my data helps me and you make more sense of the market, then so be it. One of my favorite "over the top" data nuggets is a visualization of how all the major sectors are performing compared to one another. You can technically get the same information with the raw numbers, but there's just something about seeing how their relative strength changes over time. Notice anything odd about the chart? Every sector-based ETF is in a downtrend since the early-September peak, except one... the utilities sector. It started to move lower in early September, but by late September when it started to look like the market was doing more than just going through a lull, interest in the utilities sector perked up again. It's not surprising. When stocks really get into trouble, money tends to migrate out of aggressive and speculative arenas and into conservative and safer areas. And, it doesn't get any safer of more reliable than a utility stock. More relevant to us right now, the utility ETF is still rising, while the rest of the market is still slumping. This is the market's way of saying it still sees more marketwide weakness ahead, based on what it's still buying and selling. If folks were thinking a rebound was nigh, they'd be rotating out of safe havens and back into aggressive sectors like technology and energy. A self-fulfilling prophecy may be in the works. The funny thing is, when I decided to just take a look at the regular bar chart of the Dow Jones Utility Index, not only could I see the strength, the shape of the chart was decidedly bullish. It's not something we can say about too many other areas right now. Take a look. In a nutshell, while the sector's been a choppy underperformer since May, in retrospect we can see that phase was actually a consolidation period, and now the group is acting like it wants to come out of that consolidation in a bullish direction. You may want to go shopping within this sector, especially if you think things are going to get hairier and scarier for the overall market for a while. We're Dumping ePlus, But... As much as I don't want to do it (and as impressed as I am by how well it's held up, all things considered), we have to pull the plug on ePlus (PLUS) ... our last holding in the SCN newsletter portfolio. If you bought it because of us, we suggest getting out of it now. Truth be told, there's nothing particularly wrong with it. PLUS is still holding above all of its key moving average lines, and is still within striking distance of new multi-week highs. With the market's tide getting so bearish here, however, we can't afford to leave anything to chance. We're actually making a little money on ePlus. We got into it on September 23rd, and today's closing price was somewhere around $57.48, which translates into about a 1.4% gain. Better to lock in a small gain than let it turn into a loss, and from here I think the odds favor weakness from the stock. So now what? You know, I've been thinking about this for a while now, and although I never want to say never, I think we're going to rely more heavily on John Monroe and the Elite Opportunity for stock picks in the future. While we've done a pretty good job with our own stock picking, John and the EO team basically pick stocks on a full-time basis, and they're good at their job. Heck, they're the best. As for what this means to you, I'll go ahead and tell you up front that any trading ideas we pass along to you may be a little dated by the time we get them in your hands. We have to give the Elite Opportunity members plenty of time to take action on entries (and exits). And, given the end-of-day delivery of this newsletter versus the Elite Opportunity's intraday delivery, we'll probably even have to be a bit pickier on entries, since a lot can happen overnight and we want to make sure we're balancing the inherent risks and reward of waiting to enter new positions. This will ultimately mean fewer picks here in the free end-of-day newsletter, but I think we can make it work reasonably well. Or, you could just do the much easier and much timelier thing and just become a subscriber to the EO service. It's the ideal upgrade to the commentary you're already getting in this free newsletter, and you'll get about an average of one new pick per day as an Elite Opportunity subscriber. Here's how to get a free two week trial . Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1