Good day for earnings? Stocks go up. Bad day for the economy? Stocks go down. Central banks promise stimulus? Stocks go up. Earnings fizzle for a couple of days? Stocks go down. What a freakin' joke. All of those reasons are rational and reasonable, but if the cheese gets moved every day, stocks aren't going to make much net progress. And they haven't. Oh, the S&P 500 bounced today, but it's basically right back where it was three weeks ago. There's a HUGE hurdle clearly getting in the way now, which we'll dissect in a second. First I want to explore a megatrend that may require some action on your part. Megatrend #3 What's a megatrend? Even if you're not familiar with John Naisbitt's 1982 book Megatrends and his follow-up book Megatrends 2000, your assumption of what the term 'megatrend' means is likely on a target - it's a social/cultural/financial trend that's going to unfurl no matter what else is happening or not happening in the world. Ever since Naisbitt published the first book, the term's been used (and abused) by people looking to add some scope to their predictions. I'm not ashamed to do the same, but only to put things in perspective. The first megatrend I pointed out was back on March 13th when I deemed cybersecurity was a hot button for 2013. The second was the advent of three-dimensional printers, in the March 25th newsletter. I see these devices as being game-changers even though it will take years to fully appreciate their impact. In the meantime, the companies that make 3D printers are well positioned as the providers of the "must have" tools that will make the megatrend happen. So what's my third big investment-worthy megatrend for 2013? It's probably one you started to hear a lot about six years ago, but fell off the proverbial radar about three years ago. Just to set the stage, I ran across a news story today explaining how the nation's current drought conditions were not only problematic for farmers, but they were also crimping natural gas fracking operations for some drillers who don't have access to their own water supplies. Quick lesson: Fracturing, or 'fracking', underground rock formations to unlock the natural gas and oil trapped within them is done by forcing water into the ground until a fissure opens up and lets the hydrocarbons escape. Of course, when the gas is thousands of feet into the ground, the amount of water needed to crack the earth is huge. So what? The problem is, natural gas explorers are now competing for water with farmers, who are butting heads with water companies who need to supply water to residential customers. It's getting ugly too. The statistics are staggering. Over a period of less than two years, the nation's natural gas frackers consumed nearly 70 billion gallons of water. That's about a year's supply of water for 2.5 million individuals. The megatrend isn't about a more efficient fracking process though. [There's certainly a need for it, but that's not my point.] In fact, the lack of water for the fracking process in only one sliver of the bigger problem. As you may well know, the nation and the world are slowly running out of potable water. I'm willing to bet most of you already knew that, so I'm not going to pretend like I've rocked your world by opening your eyes. I am willing to suggest, however, that you probably didn't realize just how dire the problem has become, and how big the opportunity is. Every day in the United States, more than 800 water mains break and require replacement. A 'main' is one of the big pipes that can feed water to several dozen water customers. They ain't cheap, and they ain't easy or fast to fix. And just to make sure you know how big and ridiculous the problem of faulty water mains has become, that's not 800 water mains per year in the United States - that's more than 800 broken mains EVERY DAY! Yeah, we've got a water infrastructure problem, and despite much-raised awareness of the problem beginning a few years ago, we're not actually any closer to a long-term solution. As of the last look, experts believe our nation alone will need to spend more than $100 billion to get our water infrastructure fully repaired and/or upgraded meet the growing need. The financial need is proportionally similar all across the globe. Natural gas mania has added to the problem, but now that we've fallen in love with natural gas, we're not about to leave it behind. I could go on, but the point is made. Besides (and like I said already), I'm not exactly breaking new ground here. I just want to reiterate the megatrend because I've got a feeling the market has forgotten just how big of a deal it is. The time to buy something is when nobody else cares about it, you know? As for ways to play it, there are several. The knee-jerk reaction would simply be to buy into a few water utility stocks. That's not bad, but perhaps lacks growth potential. The real opportunities I see here are in infrastructure plays like Northwest Pipe (NWPX) or desalination names like Consolidated Water (CWCO). Northwest makes valves and fittings for water pipes, while Consolidated is one of the few desalination companies that has achieved enough economy of scale to make the process fiscally viable. Both stocks are also just now coming out of long-term slumps too; you know how I love a good bargain. Those are just a couple of the possibilities in this space though. Now, while I've painted a broad brush stroke for you, I'd be the first to admit my take about doesn't give you the fine trading details you need to pick a particular stock; timing is still half the battle. Unfortunately, I just can't afford to get that detailed here in newsletter. If you would like to translate these kinds of bigger themes into specific trading ideas, however, that's exactly what the SmallCap Network Elite Opportunity does. Remember the Advanced Micro Devices (AMD) trade they made that I told you about yesterday? Yeah, well, that trade - now up more than 30% for the SCN EO - was ultimately rooted in the fact that AMD was finally starting to wade into the growing waters of mobile internet and tablets with what some would say are superior products. It paid off a big-time. The SmallCap Network Elite Opportunity's uncanny ability to spot opportunities where ALL of a stock's proverbial planets are lining up is what makes it such a potent service. Here's the deal. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Close, But No Cigar If today's high for the S&P 500 seemed oddly familiar, that's because it should. It was pretty much the same high as yesterday's, and the day's before that. It was also the peak level from early April, all right around 1598. Had we just hit it once, I would have thought little of it. To see the effort stall there three days in a row though, and right in line with the peak from three weeks ago? Yeah, that's not a coincidence. This is a big psychological hurdle. While I would have figured the 1600 level was the more relevant mark, traders have drawn their line in the sand at a value that's most relevant to them. That's a hair under 1600. To be fair, the NASDAQ actually reached new highs today, and the Dow fell a little short of peak levels hit earlier this week. Overall though, I'd say it's becoming clear this is the time and place where investors get too nervous to keep bidding stocks up. While the market was up quite a bit, participation was weak - volume was noticeably lower than average. So now what? The 'now what' is to sit tight and let the market tip its hand. I know we've been saying that to you a lot lately, but that doesn't mean it's not the best advice given the situation. No sense in making this more than it is just to take up space. We'll talk to you tomorrow.