Yes, we may have seen a glimmer of hope for more bullishness in today's session, but there's no way we can deny it was a very tough effort to muster what little bullishness we saw. The market was already overbought to begin with and today's lack of 'umph' could be an omen of an overdue pullback. We'll look at the market's reality in a moment. The first thing we need to do is take care of a little tradin' business... an exit, and an entry. Portfolio Update You know, this morning I was almost ready to pull the plug on the ANI Pharmaceuticals (ANIP) position. I know it's only a few days old, and it wasn't like we were deep underwater with it or anything. We just don't want to be holding onto something without at least giving ourselves a chance to develop some sort of profit cushion early on. As it turns out, it's a good thing we don't send this newsletter out to you guys until the end of the day. Over the course of Wednesday's trading, ANIP fought back to end the session with a very nice gain. This is the second bullish day in the past three, and the second time we've watched the stock pop back above its key short-term moving average lines. It should be pretty clear to everyone the bulls aren't planning on backing down any time soon, which is apt to be the assurance everyone else needed. We were also mulling an exit of Cloud Peak Energy (CLD) after it hit new multi-week lows today, but we're going to stick with it a little bit longer too. I know the media's rhetoric on coal has turned sour of late, and I know coal prices have waned a little in the past couple of weeks. The rhetoric and the deterioration of coal prices don't quite jive though. Thermal coal has only fallen from a peak of $63.50/short ton to about $62/short ton now, and it's remained at the $62 level for about a weak. The bigger uptrend is still alive. If things were as bad for coal miners as the media was making them out to be (again), coal prices would be in much bigger trouble here. That's the long way of saying we'll stick with CLD for a while longer. Today's tall bar and decent bounce may have been something of a capitulation and the beginning of a rally. We are, however, going to go ahead and boot Genesco (GCO). If you're in the GCO trade, go ahead and get out at your earliest convenience. We still like the stock's long-term opportunities, but if the rest of the market isn't interested in those opportunities right now, our appreciation of them doesn't matter - the stock's going to be under fire. And, with today's strong break back under a floor at $73.75, we fear Genesco is too far gone to salvage. That leaves us with Astec Industries (ASTE), which we're going to stick with for now. I think we mentioned last week the stock looked it was working on a bullish reversal, and we've seen that reversal take shape. This is where we are as of right now, NOT yet accounting for the exit of Genesco. Keep reading though, because we're adding a new name to the portfolio today. New Stock Pick Whether you realize it or not, somehow, in some way, directly or indirectly, you probably own something that Hurco Companies (HURC) helped create. Hurco is, in simplest terms, a manufacturer of machine shop equipment.... CNC machines and lathes either used to make specialized parts or used to make the tools to make those parts. It and its peers are proverbially everywhere, including right under our noses, though few people recognize just how important their handiwork is to our everyday living. Without getting too deep into the discussion, I see Hurco as a play on the advent of 3D printers that allow anyone to become their own machine shop. The difference is, where most 3D printers are still toys and/or for hobbies (sorry, but it's true), machining equipment is a tried and true part of the world's manufacturing industry. To be clear, I've yet to see or hear anyone else lump HURC into the 3D printer race that heated up a couple of years ago, and I'm not exactly doing so now either. What I'm saying is, similar to the way the costs of 3D printers have gone down while their capabilities have gone up [3D printers can now cut metals], the price of CNC machines and lathes like the ones Hurco makes have also gone down while their capabilities have improved. There's just one difference between the relatively new 3D metal printers people are using to set up a mini-manufacturing business and the machining equipment made by Hurco - Hurco is backed by years and years of know-how and its devices are built from the ground up to make metal parts. 3D printers, while cool, still somewhat struggle to machine high-quality metal parts, and are still an adaptation of a design intended to carve plastic and foam. That's not to say an at-home 3D printer can't make quality metal products, but let me ask you this: Would you rather the Boeing 747 you're flying in have parts made by a real CNC machine at a real machine shop, or would you be ok knowing parts of the 747 you were flying in were made by your neighbor in his garage on a printer he paid a few thousand bucks for? Well, Boeing feels the same way. The point is, HURC makes the real thing for real applications, and its wares are more than something that just power cottage industries. This isn't to say the low-end 3D printers that lit the market up in 2012 will never "get there", but they aren't there yet. While it was the obscurity that drew me to HURC in the first place (regular readers know by now I have a penchant for off-the-radar names, as that's where most of the best opportunities lie), it was the company's fundamentals and its chart that kept me interested. As our long-term chart of Hurco Companies' results tells us, the company managed to work its way out of the post-recession rut, though it didn't push itself up off the mat until 2011. Thing is, the same chart also suggests earnings are already starting to deteriorate again. Based on this downtrend alone, HURC looks like something best avoided. That's part of the opportunity though - the next twelve months aren't likely to look like the past twelve months. Take the estimates with a grain of salt because, well, they're estimates, but also remember the folks who make these guesses tend to be relatively smart folks... as a group. Whatever the case, the pros expect HURC to post a profit of $1.53 per share this fiscal year (ending in October), up from last year's EPS of $1.25. These same guys believe the company is on track to earn $1.62 per share next fiscal year. Personally, I suspect the outlooks are realistic. All that aside, the biggest reason I'm digging HURC now is, the chart suggests a breakout could be in the making. While erratic since 2010, Hurco Companies shares have at least defined a rising support line. More important to us right now, it looks like HURC has been pushing up and off of that line for weeks and has finally developed escape velocity. I also get the feeling the string of lower highs since 2011's peak has caused a bunch of compression, like a spring being coiled up. Once unleashed - and the slightest of nudges could to the trick - the spring could "boing" in an instant and send Hurco shares higher in a hurry. It may happen soon, or not too soon. Heck, it may not happen at all. With a very strong rising support line in place, however, I see a very favorable risk/reward relationship on the table. It's just an idea. Take it or leave it. But, we are going to be adding it to the newsletter's pick list as of tomorrow morning. Stocks Pressing Their Luck To give credit where it's due, John Monroe over at the SmallCap Network Elite Opportunity was the inspiration for much of today's take on the market. I won't be able to tell you everything he said. In fact, I won't even be able to tell you most of what he said. I should be able to share enough of what he put into the EO newsletter today, however, to let us see and think about things in the light we need to. So what could go wrong with the market here at what would normally be a buy-worthy breakout? A couple of key things. First, isn't the break to record highs a bullish event? Monroe explains: "...while so many old school traders and investors tend to trust breakouts, if you go back and look at every major breakout of any individual stock or index in recent years, breakouts are far less trustworthy than they've ever been before." And sure enough, a quick look at the market's history confirms buying new highs has not only not been a good idea in years, but it's been a spectacularly bad idea. Second, investors may not be as truly bullish as they're being made out to be. John tells us: "...if there's such a massive interest in stocks right now, then why is TLT, the ETF tracking the 20+ year treasury bond, breaking to a new high for the year today when interest rates continue to fall? What this bond buying activity means is there's an awful lot of smart money out there continuing to move money over into bonds and away from stocks even though stocks have continued higher." He's got a great point. It's not all he had to say today, but with those two observations alone I was really able reframe my point of view for the better. And you know, his concerns jive pretty well with the ones we've had for a while. Specifically, I've been alarmed about the lack of (and weakening) volume behind the rally effort for quite some time. Some of this we can chalk up to the season, but I have to chalk a lot of it up to the sheer lack of confidence in the market right now. The waning volume is crystal clear on our usual chart of the S&P 500. I'm mentally tabling the buy/sell decision on the market for the time being, waiting to see how things take shape from here. But, I've got a feeling stocks ran out of gas today, and it seems like John's thinking the same basic thing. The hammer-shaped pattern for most of the indices today also implies we're at a pivot. What neither of us are quite willing to put in writing yet is just how far such a dip might cut. I don't think it'll hurt too much, but it really depends on how the S&P 500's support area around 1875 holds up if and when it's tested. Something else John mentioned at the end of the Elite Opportunity newsletter, however, really piqued my interest: "...tomorrow we will show you the one single technical reason why these markets could go higher because regardless of what we or anyone else thinks, the markets are always right." I think I know what he's talking about, but we'll just have to wait to be sure. I can tell you, however, if he says what I think he's going to say, it'll be too juicy to share with anyone who's not an EO member. (Sorry, but I've probably given away too much already.) You CAN read it for yourself if you're not yet a member of the SCN EO yet though, by signing up for the free two-week test drive of the service. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/