Welcome back, folks. We hope you had a good weekend. Of course, if you bet on California Chrome again to win the Preakness, you had a great weekend. While the payout might not have been stellar (the odds were only about 3-to-5 at post-time), a win is a win, and he was clearly the best horse in the field. Just amazing. This will be the first time in a long time I've actually been excited about the Belmont Stakes when he makes a potential Triple Crown run on June 7th. We didn't come here to talk about horses though. Let's get right down to businesses, starting with an update of our current portfolio. We're making an exit on one of the positions, but found another we're interested in. Portfolio Update I'm going to acknowledge right off the bat there's a decent chance I'll regret this decision in the near future, but let's go ahead and get rid of AES (AES) at the earliest possibility. Yes, I was the same guy who suggested the end of spring and the beginning of summer could be a bullish period for utility stocks even if it wasn't bullish for any other sector, and I still believe it. But, if a stock's not moving or it's drifting in the wrong direction, there's no point in being stubborn - AES has been pointed in the wrong direction more often than not since our May 2nd entry. This isn't to say it's been getting hammered, because it hasn't been. The undertow shifted though, and I'd rather walk away with about a 5% loss than be forced to scurry away when the loss reaches 8% or more. Besides, I'm just not digging the way AES shares are testing the 200-day moving average lines as support... again. The 200-day line has been a floor a couple of times since January, but its luck as a support line is being pressed a little too often for my comfort now. If the stock should break under the 200-day moving average at $13.95, the pace of the selling could really start to pick up then. We're still holding Genesco (GCO), and we're still holding our coal play, Cloud Peak Energy (CLD). There hasn't been any recent news from either of them in the last couple of days. There hasn't even been much news about either of them in the past couple of days. But, there's an updated chart we need to show you regarding Cloud Peak Energy. This is actually a chart you've seen before - the chart of the Dow Jones Coal Index, which lumps the market's major coal miners into one group. The index was up today to the tune of about 1.5%, making it one of the market's best-performing industries. The move also came close to fully rekindling the breakout move that started five weeks ago when we first pegged coal as a compelling recovery idea. Take a look. As you can (sort of) tell, there's a minor ceiling around 149.0 which has kept a lid on the bullish effort for the past three weeks. The bulls are still pressing though, and with a string of higher lows in tow we suspect the path of least resistance is still to the upside. The pace of the rally could heat up if the 149 mark is hurdled, however. What's interesting about the solid move from the Dow Jones Coal Index today is how it wasn't prompted by the usual leaders like Peabody (BTU) and Yanzhou Coal (YZC) (although CONSOL (CNX) chimed in bullishly). Even Cloud Peak Energy was a little in the red today. A lot of today's strength for the coal sector as a whole came from the mid-sized and small cap names. This is a nice and important change because they hadn't been doing particularly well. The more participation we have in the effort, the more rewarding it is for us. The point is, I know the idea of a comeback for coal seemed insane a month ago. That sure changed in a hurry, though. Speaking of the portfolio, we are starting to see some budding momentum here and there, which means our scans are starting to give new buy signals again. We're going to be showing you the best of the best additions to our watchlist this week and next week, beginning with a look at one of the additions today... Bel Fuse (BELFB). As proof that the system works at finding emerging momentum, the sort-n-scan identified Bel Fuse as a buy-worthy name at the end of last week, once Friday's data was downloaded. Sure enough - and this is the annoying part - BELFB surged nearly 9% today, before we could get in. We're not worried though. While it's a little overbought in the near-term, this is a bigger-picture trade we'd expect more from than a 9% move. Now the debate turns from one of "if" to one of "when?" Answer: After a pullback, and ideally right in front of the next rebound. The stock's longer-term uptrend is already established, as confirmed by yet-another push off of the 200-day moving average line. Bel Fuse isn't just a technical-based trade, however. The market is also underestimating this stock, pricing it at a trailing P/E of 13.9, and a forward-looking P/E of 10.6. You should also know BELFB has beaten the daylights out of earnings estimates in most of its recent quarterly updates. It's just one of a handful of possibilities we could make official picks here in the near future. Whatever Yawn. Yes, the market may have made a decent gain on Monday, but so what? We've seen bullish days several times within the past couple of months, and none of them actually shook stocks out of their rut. This one didn't either. We're still caught in the middle. Anyway, as I was stewing on the lethargic reality shortly after the close today, I was reminded of something John Monroe mentioned in the SmallCap Network Elite Opportunity newsletter this afternoon. John wrote: ..."I received some emails over the weekend from a number of long-term SCN EO Members regarding our last couple of newsletter editions. We've got some very astute professional and individual traders and investors as Members of SCN EO here and the general theme of the comments and feedback range from various views on the current market landscape to questions regarding when to play contrarian and when not to. This is precisely what tends to start happening at key pivot points in the markets. When you start getting an equal number of players participating on both sides of the trade on the basis of strong opposing views, that's when you know the indexes are on the verge of a pretty sharp and more importantly, defining market move." He's exactly right. Heck, even within my ongoing daily analysis of the broad market we've probably made as many bullish arguments as bearish ones recently, with all of them being sound arguments at the time, in their own context. This back-and-forth, tractionless battle IS a sign of both sides of the table being equally matched, and they have been for a while. Sooner or later - and probably sooner - we're going to get a big move. It's just not apt to happen until the majority of traders are convinced the market can't go anywhere for a while. We're close to this point, however. With that being said, we can't stress to you enough the market often works hard to frustrate as many people as possible as much as possible, aka the market's "max pain" rule. In other words, don't be surprised if just when it looks like we're finally making a big move in one direction we end up making the big move in the other direction. I wanted to make that point before we take a look at the NASDAQ Composite, which has become my favorite chart of late simply because it's offering a little more clarity on what a breakout will look like. As we discussed last week, the composite has been bouncing around inside a converging triangle pattern. The upper edge of the wedge shape is currently at 4153, while the lower side of the wedge is resting at 4045. Conventional wisdom says once the NASDAQ breaks out of this triangle shape then stocks will continue on in that direction. And, truth be told, it may pan out this way the next time the opportunity arises. John Monroe doesn't exactly agree with this theory, however. He's drawn a line in the sand slightly above the upper boundary of the wedge pattern, and he's got a sneaking suspicion a retest of his level - though it would seem bullish at the time because of the break above 4153 - would actually be a setup for a pretty significant correction. Now, I can't tell you where his ceiling is, but I can tell you I've been reading his analysis every day and I completely understand what he's talking about and why he's worried about that line. You should be worried too. I'm not saying (nor is he saying) this invisible ceiling is the end-all, be-all. It certainly would play into the market's penchant for "max pain" though. We'll continue to dissect the market in search of clarity, but if you really want something to help get a grip on the broad market here, the SmallCap Network Elite Opportunity has been a great tool for its subscribers of late. Here's how to get it, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Hey by the way, there's a very good chance we're going to have a new trading idea for you tomorrow (Tuesday) morning, rather than waiting to let you know about it after the market closes. Just keep your eyes peeled for anything from us in the a.m. If you don't see the newsletter in the morning it means we've changed our mind and we'll send our regular after-the-close edition. We're digging this stock quite a bit though, and barring anything unusual between then and now you should have it in your inbox sometime Tuesday morning.