Welcome to the weekend, one and all, and for the first time in a long time we can start the weekend not feeling like the market beat us up over the past five trading days. Funny thing is, this week was actually - technically - a loser; the S&P 500 closed down about 0.9%. All of the progress came on Friday on the heels of Thursday's modest rebound effort. None of that progress was enough to undo Monday's and Wednesday's damage, though. So now what? We're going to stick with our original (from Wednesday) thesis and say the bounce is still underway. I'm basing this outlook not so much on the daily chart but on the weekly chart. It's in this timeframe we can see a huge long-tailed dragonfly doji from the S&P 500, and a tall gravestone doji from the VIX. Both point to more bullishness from stocks in the foreseeable future, since both are key reversal clues. It's not like this bounce is without potential challenges though. We'll look at a couple of the biggest ones, but first let's take a gander at today's only meaningful economic data. Real Estate Isn't Great, But It's Good Enough Last month, the real estate market logged another step forward. It wasn't a huge step, but it was a positive one. Housing starts reached an annualized pace of 1.017 million, and building permits were issued at an annualized pace of 1.018 million. Both long-term trends are plotted on the chart. Clearly we're still nowhere near 2005's and 2006's peak levels. Then again, we don't have to be there. Our primary concern is that both data sets continue to trend upward. The starts data seems to be doing so reliably, but it looks like the permits data trend has almost completely leveled off since about this time last year. That's ok, but it wouldn't take much for the permits trend to turn negative. Anyway, we get a whole slew of real estate numbers next week. We'll be able to get a much better grip on the real estate picture then. Not Out of the Woods Yet I have to give a shout out to my friends over at the Elite Opportunity service. Their level-headedness and acumen has allowed me to remain level-headed with you guys, as I tend to get most of my perspective from John Monroe and his team. We got more of that level-headedness from the EO today. What did John Monroe and company have to say? They just wanted to remind their readers even though the current trend is bullish and we have to assume that trend will remain in motion until we have proof it won't, there are things that could prove frustrating. The good news is, we know exactly what those potentially frustrating things are and what they'll look like. Maybe it would be best just to let John say it than have me try to describe what John said. So, here's a small (and relatively condensed) snippet from today's edition of the Elite Opportunity: "...although yesterday did confirm a key technical reversal signal based on what I said above, the fact it let the short-term traders in yesterday and allowed them to get long, does pose a bit of a concern. Bull trap? Maybe. We'll see. The bottom line is based on what we're seeing today, it's all good. Short-term bulls should probably stay long until either their revised SSL's up to their entries are breached or until the NDX achieves between roughly XXXX [removed by editor], which would be a complete (Fibonacci) retracement from its September highs to this week's lows in this daily chart shown here, and roughly XXXX [removed by editor], which represents the complete (Fibonacci) retracement of those same levels just mentioned. I should also point out all the NDX has managed to do now is find its way back to its blue indicator line) on its daily chart, which you can see here, so it has every right to either break above it for a few days and then break down, or simply resume its recent downward trend as soon as early next week." Sorry we had to edit out the key numbers and explanation of all the indicator lines from the text, but even without the specifics you can get a pretty good idea of what John's seeing (and you could probably figure out the omitted numbers and lines if you really wanted to). The chart helps quite a bit too. If you want the simpler version though, what he's saying is, while the undertow looks bullish, there remain a couple of lines in the sand that are already key psychological levels that could change things for the worse in a hurry. These levels aren't readily obvious on most charting platforms, which is why they work so well. I'm willing to give the rally the benefit of the doubt, but I'm still not willing to turn my back on stocks for one second. On that note... You ever heard someone lament "technical analysis doesn't work"? I've got some news for you.... what they're really saying is "I don't know how to do technical analysis very well, so rather than own up to that reality I'll just dismiss the whole idea as ineffective." I know for a fact proper technical analysis it works. Perfectly? Not at all. Then again, fundamental analysis doesn't have a success rate that's any better. The key is understanding that technical analysis is a tool - not a time machine. With that being said (and I'm not sure I've ever come right out and said this before), the Elite Opportunity is a near-perfect blend of technical analysis and fundamental analysis, and John Monroe is just about the best there is when it comes to extracting the best of both the technical world and the fundamental world. Used together - and when used properly - a combination of smart technical and fundamental analysis can make you a lean, mean, trading machine. If you've struggled getting much out of chart-based analysis, I suspect it's because you're either (1) applying too much technical analysis [i.e. overanalyzing], or (2) you're using the "out of the box" tools and settings that are the default for most charting software. It's a problem because millions of other traders are using the same tools in the same way at the same time; you can't do what everybody else is doing and expect to do well. To get the most use out of chart analysis, you have to look at things in a way other people don't. That's where John's expertise could really change things for you. See, he looks at charts in a whole new light, using tools most other traders don't use. That's why he has so much success doing it. He also creates a lot of success for himself and Elite Opportunity subscribers because he never forgets that technical analysis is just a tool, and in the long run stocks will always, eventually reflect their underlying fundamental value. I guess that's my long way of saying if you don't feel like you're getting the most you can out of the market, the Elite Opportunity can help teach you to do so because John really understands how the market works. I hope that makes sense, but I'm sure I'm still not doing Monroe and the EO justice. If you really want a game-changing tool in your arsenal, take a free two-week test drive of the Elite Opportunity newsletter. Browse the archives. Ask questions. Put those guys to the test! I'm sure you'll love it. Here's how to get the free two week trial. Or, cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1