Dear Japan, Thank you. Your stimulus plans announced Friday morning put the U.S. market into high gear on Friday, getting us close to record highs. In fact, some of the major indices did reach new all-time highs. The result of your unveiled QE plans, however, really put our stock market in a pickle. See, while any QE anywhere is ultimately "good" for all stocks, today's jolt exacerbated a short-term problem the U.S. market was already having a tough time contending with. Namely, the S&P 500 index now has not on but two gaps it could be pressured to fill in by pulling back. And, with today's intraday strength, our market has reached a point where a lot of investors are thinking about taking profits anyway. Never even mind the fact that the S&P 500 has now rallied more than 10.0% from lows hit two and a half weeks ago. Don't worry about it; we don't blame the announcement of your QE for our stock market's response to it. We're just keeping you in the loop. Sincerely, The SmallCap Network Team OK, obviously Japan as a country isn't going to read our note (especially considering we only mailed it to you guys). That's fine though... it was really more for our readers anyway, to explain to you how seemingly good news can ultimately accelerate a stumble we have to experience for our own long-term good. That's the long way of saying I think we're near or maybe even at a short-term top, sparked by this one last hurrah on the heels of Japan's QE intentions. Those are the broad brush strokes anyway, but just for the sake of clarity, let's fine tune our thoughts. Yes, the momentum is incredible, particularly in the shadow of the move above the S&P 500's resistance level of 2012. The volume behind today's gain was relatively solid as well. For all intents and purposes, today was a bullish sign. As I've lamented more than a couple of times in recent weeks though, momentum is a fun ride while it lasts, but the stronger the momentum is, the sharper the reversal once the music stops. And, the last twelve trading days have been freakishly bullish. While you can get a basic feel for how oddly bullish the past two and a half weeks have been with a look at the daily chart, a glance at the weekly chart paints a much more meaningful picture. This is the strongest two weeks we've seen from the market since 2009! Now, just because something is unusual (if not completely unheard of) isn't to say things can't get more remarkable in the immediate future. When we start to see things we've rarely if ever seen before, however, more often than not the market regresses to the mean, or average. We're well beyond the upper limits of "average" now. Never even mind the fact that the S&P 500 is now valued at a trailing P/E of 17.6 and a forward-looking P/E of 15.6. Those values don't leave a lot of room for upside, but that's not even part of the issue today. I also can't help but wonder if the smart money is going to use Friday's surge as a reason to start taking profits. It's in complete contrast to the "buy new highs" advice you've probably always been given. I'm telling you though, far more often than not - in the modern market anyway - the brush of major new highs and major news lows tends to result in a complete reversal. Remember, the market's job is to frustrate as many people as possible as much of the time as possible. This jump to new highs today would be a perfect opportunity to sucker-punch a lot of unsuspecting investors. Let's reconvene on Monday to see if my gut feeling is right. Consumers Sure Are Feeling Good There wasn't a great deal of economic news today, but we got one piece of information worth mentioning - the Michigan Sentiment Index for October rolled in with a score of 86.9. That's the strongest reading we've seen since 2008, but more important, is another vote of confidence for the long-term bull market. I'll confess to you it was a little bit surprising, seeing as how the market got smashed in the first half of October. I woulda thought the dip was a reminder that this market isn't infallible, putting the kibosh on confidence. Consumers seem to have a short-term memory though, seeing the market rally over the past two weeks and assuming the rally is the norm again. As a reminder, the Conference Board's consumer confidence reading jives with the Michigan Sentiment Index. Consumer confidence hit a level of 94.5 this month, which was also a multi-year record. The broad improvement in confidence won't stave off the market's short-term pullbacks. The uptrend in consumer sentiment continues to bode well for the long-term market, however. My Apologies - A Metal Update I owe you an apology. Most of the time I open a can of worms, I keep tabs on it until it's closed. It's just been so busy the past couple of months, however, I haven't had time to stay on top of our bullish calls on copper and aluminum from June 18th. As a matter of fact, the last time we even talked about copper and aluminum was in the August 22nd newsletter. Yikes. There's no time like the present to make up for lost time though, so let's get this look off of our checklist before we sign off for the day, and the week. The last time we looked, we loved copper and merely liked aluminum. Today, we love aluminum, but we're not crazy about copper. The chart below explains why. We were expecting a limited accessible supply of copper against a backdrop of what was supposed to be growing demand from China to send copper prices much higher. Nothing ever came of the alleged demand from China though, and more recently we've actually started to see supply levels of copper tick higher. For us, it's no big deal as we didn't suffer a loss no matter how we played it. Copper was trading at about $3.00 per pound then, and was somewhere around $3.08 today. It's just a little annoying. As for aluminum, the world's least-sexiest metal was valued at $0.82 per pound back in June when we first started looking. We honestly didn't expect a whole lot of upside, but we've been pleasantly surprised. As of today, aluminum prices are in the $0.92 area, and acting like they want to keep moving higher.... a case of the stronger it gets, the stronger it gets. You can see the renewed price momentum after peaking around $0.96 in August, but what's really compelling about our chart below is that the supply has been further depleted to levels not seen since 2011 when they were on the way up. We have to assume the current trend will remain intact until the trend lines are clearly broken. That could be months from now, though. I know industrial metals seem like an obscure arena, and maybe they are. As I was reading today's edition of the Elite Opportunity newsletter, however, it hit me like a ton of bricks - we're all going to have to be a lot pickier about or stock selections for the foreseeable future than we've been in the past. The market's changing, and we really can't rely on a broad rising tide lifting our particular boats. We have to be in the right boats at the right time, and it's entirely possible one basic materials industry like gold could be falling while another basic materials industry like aluminum is rising. In fact, this is exactly what we've seen happen over the past few days. Speaking of the Elite Opportunity and gold, you do realize John Monroe over at the EO called the plunge in gold several days ago, don't you? It was back on October 20th he said gold looks ripe for a short, and since then GLD has plunged more than 6.0%. Is John now going to recommend taking profits on bearish gold trades and reversing his call to a bullish one? He didn't in today's edition of the Elite Opportunity newsletter, but I'm sure it's on his mind. You can find where Monroe stands on gold right now - and not miss his next big winner - by signing up for a two-week trial to his service. Click here to claim it. Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1