Welcome back, one and all. Did everyone have a great weekend? We hope so. The market has forced us to put our trading hats back on right out of the gate this week though, so let's just dive in and have a heart-to-heart chat about what really happened today. Advertisement Will this event trigger the next Great Depression? The Florida-based economist who predicted nearly every major financial event of the last thirty years now warns that we are sitting on the precipice of the greatest financial crisis in history. To see his detailed analysis, click here. Advertisement First and foremost, if you want to know how the market managed to tack on even more gains after such an incredible move last week, I suspect we can chalk it up to (1) momentum, and (2) Oppenheimer's Ari Wald suggesting we're about to enter the best bull market we've seen in 85 years. Now, whether there's merit to what Wald is saying or not is somewhat irrelevant (we'll get back to the relevancy thing in a second), I gotta say, it's this kind of hyperbole that can really do more damage than good for investors. Most people read headlines, but most people don't read entire news stories. If someone had been on the fence up until this point and missed the bulk of the rally and THEN decided to get into stocks today based on Wald's assessment - and the media's gloss-over of his message is just as culpable - then odds are good those investors are going to be real frustrated, real soon. See, whether you like the market or not here, there aren't too many people thinking the market isn't overbought in the short run and due for a sizable dip. I don't mean a game-changer for the worst, but I do mean sizable. The S&P 500 is now valued at a trailing P/E of 17.5, which is most definitely at the outer limit of what the market can sustain... at least in the near-term. With all of that being said, I'll confess there is some merit to the reasoning Wald put on the table, and it provides the perfect segue into a look at a chart I've been planning on discussing with you for a few days now. He said "Valuations to bonds, though, are much more compelling...There's a floor for stocks. And, really with nowhere else to go with your money, I think stocks continue to move higher." He nailed it - overvalued or not, there's really no place else to park your money for the time being. We discussed it in detail last week, but just as a refresher, there are three key categories of investments: equities (stocks), bonds, and commodities (gold, for most investors). There's always at least one of the three rallying at the expense of at least one of the other two; it's been that way for decades. Wald said there's nowhere else other than stocks to go with your money other than stocks, and our data says the same thing. The chart below tells the whole story. Gold is still struggling, and with the U.S. dollar still gaining value - which hurts the value of gold - it's not like there's much demand for it to crank its price up. Bonds? No, interest rates (yields) are on the rise as fixed-income investors are demanding higher returns - maybe in fear of looming inflation - which is pushing bond prices lower. If gold and bonds are losing value, what's left? You got it... stocks. They may be overvalued compared to their own history, but on a relative basis it still feels better to own overvalued stocks than it does to own gold and bonds. Here's the trick with the whole situation... we have to keep a firm grasp on what's short-term and what's long-term information. This can be bearish as well as bullish, depending on the day. I've got a feeling the trends we're seeing on all fronts are going to last a while. Specifically, I suspect the U.S. dollar is going to keep moving higher and I've got a feeling yields are going to keep rising too (partially because of the rising dollar, partially not). That's going to sap gold and bonds until further notice, which is bullish for equities. Now, as well supported as stocks may be because of the undertow for the other two asset categories, the trends I'm seeing here will NOT stave off a short-term stumble for the stock market. And yes, I'm willing to say we're starting at least a small pullback today. To give credit where it's due, John Monroe over at the SmallCap Network Elite Opportunity has been talking about the S&P 500's likely cap around the 2000 mark for months... long before anybody else was thinking the index would come as far as it has over the past nine months. We're not quite to the precise target yet, but we're plenty close enough to the 1976 area to say we've gotten there, and we need to start thinking about the combination of technical resistance and a backdrop of valuation problems. I'm not talking about the beginning of a new bear market. I don't think John Monroe is either. But, with the technical rally slowing down here right where it should while there are some crystal clear fundamental challenges upon us, if there was ever a spot where stocks were going to stumble, this is it. And like I said, think it would be wrong not to plan for a pullback here by at least locking in some profits. The indices tried to forge ahead to higher highs today, but peeled back from those highs quite easily. The fact that the rhetoric has become so ridiculously bullish thanks to Wald's comments is just the contrarian icing on the pullback cake. And again, Monroe has been talking about the S&P 500's ceiling for months now and seems to have pretty much nailed it. It's not the first time he's threaded the market's needle with surgical precision either. If you want to see him do it in real-time (and considering how close we may be to a correction, now would be a brilliant time to do it), this is where you'd want to use the free two-week trial offer if you're not yet an EO member. He can spot the short-term pullbacks coming - and their bottoms - just as well as he has a knack for spotting long-term turning points. If you want to navigate the market as well as anyone else can, Monroe's your guy. 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/ Portfolio Update Due for a pullback or not, our picks had a great day today. In fact, it's time to start talking about mental stop levels and maybe even a target or two. First and foremost, this is how we're doing as of the end of today. Astec (ASTE) and ANI Pharmaceuticals (ANIP) have just really come alive the past few days, and Hurco (HURC) fared pretty well today after its wild surge on Friday. Even Peak Cloud Energy (CLD) held up fairly well on Monday, just closing a few pennies lower after breaking above the ceiling at $18.57. One at a time... Though it didn't remain above the hurdle, ANI Pharmaceuticals took a pretty good poke at the ceiling near $34.60. Between the advance and the volume we've seen behind the advance the past couple of days, it looks like we're going to break through and really turn up the heat. Let's go ahead and draw a line in the sand at $30.70. No target yet though. Hurco Companies didn't finish the day with a gain, but considering how vulnerable it was after Friday's surge we can live with today's action. I don't want to put a mental stop-loss in place just yet, as I don't know how the gap may continue to affect things. Let's go ahead and set a tentative target of $34.00, where HURC made a major top in 2011 before falling into a multi-year rut. Not a lot of love today for Peak Cloud Energy, but like I said above, the stock's past the big hurdle at $18.57 and that's the one we really needed to see. No stop level for the time being, but I do think we need to plan on locking in some gains if we can get back to the $21.50-ish area... which I do think we'll eventually see. Finally, I still don't want to put a mental stop in place yet for Astec Industries as the big pop over the past three days could lead to a sharp pushback. If we stabilize and then the bulls regroup though, we can safely put a stop level in at that time. In the meantime we'll make a mental note to start thinking about an exit once we get to the $45.00 area. One of the things I vowed to do better this year is letting good trades continue to run as long as possible. I haven't forgotten this promise either. There's a good chance we could let any or all of these trades move well past our first target levels. We don't want to get stubborn though, and end up letting a big winner turn into a small winner. It's all about trade management. That's why we only want to reassess the trade - and its momentum - when we get close to the technical milestones mentioned above. Anyway, though we didn't have room for them today, we've got a handful of names to add to the watchlist tomorrow or later in the week. Stay tuned for those.