Top of the morning to you. Markets are backing off a bit today, as they haven't been able to muster enough follow through to break much above their three day high. It's pretty logical since we've been saying all along 2638 - 2660 on the NDX was going to be a pretty tough nut to crack, and so far we're right on point. The NDX managed to reach 2633 yesterday before backing up yet again. Advertisement 20 Best Stocks For the Next 12 Months This market is creating many amazing profit opportunities for investors who understand the powerful economic forces at work. Louis Navellier's new report, 20 Best Stocks for the Next 12 Months gives you a rare sneak preview of the very best trend-riding companies that you should immediately purchase. Get your free report today. Advertisement Like we said yesterday, right now isn't the time to get long or short the index ETF's. As a matter of fact, we recommended yesterday you take profits on our suggested long trade from last week, which should have yielded you some pretty nice returns. It's important to take what the market gives and not get overly greedy in a volatile environment like the markets have been in for months now. However, we do have another logical trade potentially setting up, which may prove to provide an excellent risk/reward opportunity but it's very leading in nature, so you've got to be fairly nimble and ready to pounce if certain things happen. Let me explain... I've included a daily chart here of the NASDAQ Composite (COMPQ) along with a few of my favorite moving average indicators, the 25X5 DMA and the 3X3 DMA. For all intent and purposes, the context for this trade is focused on the 3X3 DMA. You'll notice here the 3X3 has crossed over the 25X5, which only sometimes can be a bullish signal, it's not a very clear or strong signal in my opinion. What I do find interesting here though is the strength of the snapback off the June 4th low, which may suggest further upside. Since this market's behavior of late is to jostle short-term traders to no end, it's extremely important we don't get overly hyperactive and really focus on picking our spots. With that being said, if and when the COMPQ pulls back to the 3X3 on the daily chart, I think that may present an opportunity to get long the market on a short-term basis. Whether you decide to buy shares of your favorite ETF or purchase call options is up to you. It's important to keep in mind that as the market continues to move, so does the 3X3. That's why it's called a moving average. Ha. Right now, the 3X3 on the COMPQ sits at 2868. If the NASDAQ pulls back to the 3X3, whatever number that is when it happens, may prove a nice entry in the event the market moves higher from there. Conversely, if the COMPQ doesn't pull back to the 3X3 and moves higher from current levels, we'll assess the action and possibly reverse the strategy. If you don't have those tools at your disposal, no big deal because that's why you subscribed to our newsletter, so we can help you navigate your way. If and when the COMPQ pulls back to that 3X3, we'll let you know. It's a very short-term contrarian approach to the market but for those of you who have been following along, we've been pretty darn good at pegging this market's movement on a short-term basis for a long time now. We don't try and argue with the market, we simply let the market tell us where it wants to go based on our own unique analysis. Hey Rocky, We Just Pulled Another Rabbit Out of Our Hat! We've been better than anyone out there at calling MagicJack (CALL) over the last number of months and our suggest June 7th entry into the stock yet again proved very prudent and extremely profitable in just two weeks' time. The stock is currently up over 30% as I type from our initial entry of roughly $14.82. The stock is above $19 now and the question now becomes where to from here? We figured short sellers had their fill and would likely be covering around that $15 level. Additionally, for the TELCO space, we also suggested shares of CALL were trading at a level undervalued compared to some of its relative peers. That strategy did not disappoint, however, as the stock starts to get a little long in the tooth on a short-term basis, it's important to know when to take money off the table. On a long-term basis, CALL offers significant value in our opinion but the stock has managed to run up quite a bit of late and may be running into short-term resistance any day now. It's just important to remember, when stocks run up too fast, they're often subject to backing and filling. I suspect shares of CALL aren't going much higher than $20 or $22 per share before pulling back and potentially providing another solid entry. If you're in the stock, you can either lock in gains now and take the 30% or you can see if you can get $20 - $22 per share. It's up to you. Is the Kentucky Derby a Prelude of Things to Come for the Market? As you know, prognosticators run rampant in the market because it's the single most profitable place on earth if you can figure out what it's going to do, except maybe the lotto I guess. Some provide very logical and rational reasoning while others come up with some of the craziest reasoning I've ever seen. Since history can make a case for a lot of things, we came across one article that is not only sort of weird, it makes you wonder. Before I give you this author's unique perspective, let me be clear and communicate that I don't believe it's true. However, it's entertaining and is an excellent cocktail party topic to bring up at your next social gathering. This was brought to us from one of our Members and we still haven't been able to find out who to give credit to for the article, so if you know who it is, just let us know and we'll provide credit accordingly. Without further ado and for what it's worth... here ya go. The Triple Crown races warrant a bit more historical scrutiny, particularly the oldest race, the Kentucky Derby, for a second and more important reason. What made Big Brown's win at the Derby so memorable was his post position: 20th out of 20. Geometrically, it's the worst slot out of the gate because the animal has farther to run than the other 19. Big Brown won anyway. It was only the second time in 133 Derby races that the 20th slot housed the winning horse. The only other time that's happened was in 1929, when Clyde Van Dusen won. You read that right. Whenever the Derby winner has emerged from the dreaded 20 hole, which was in 1929 and 2008, the stock market has crashed violently that Fall. And, these aren't your garden variety market crashes, either. Each set off a Depression (regardless of what egghead economists say). The worrisome thing in all of this is that the 20th position is only the runner-up for worst Derby post. The undisputed title of absolutely the worst position belongs to the 19th slot. There, the horse is hemmed in on both sides. The 20th position, by contrast, permits free locomotion and an unconstrained whip hand on the right. Big Brown's connections knew this, which is exactly why they waived the right to the 19th post, taking the 20th instead. Horseplayers are savvy to this fact as well. If a Derby win from the god-awful 20th position spells bad news for the stock market, 2012 promises to be an outright catastrophe. That's because last month, I'll Have Another became the first horse ever to win the Kentucky Derby from the 19th post position. In besting the achievements of the 1929 and 2008 Derby winners, I'll Have Another snapped a losing streak that was 137 years old. Think about that. The Kentucky Derby dates back to 1875. That damn near pre-dates baseball itself, much less the Chicago Cubs' World Series losing streak, which, at over a 100 years old, is easily the worst in all of major professional sports. In any event, I'll Have Another's victory lap in Louisville spells unprecedented trouble for the stock market this year, which promises to eclipse the Depressions set off in 1929 and 2008. In this sick age of doping, cheating, law-breaking, moral hazard, high-frequency quote-stuffing and front-running, the Fourth Estate's only response has been to defile our very language to conceal the stench of systemic graft: stolen loot is called "profit," and bailed out Wall Street welfare whores call themselves "capitalists" without bags over their heads. Meanwhile, honest traders are losing their asses in a hopeless search for correlations measured in milliseconds. Undoubtedly, they'd have been better off taking the longer view, declining to compete with Goldman Sachs' co-located toll booths, er, stock exchange computer servers. Now if that's not an odd but eerie opinion, I don't know what is. Have a great rest of your day. We're going to be bringing you another new featured stock tomorrow, so be on the lookout.