Hope you all had an excellent weekend. With very little impactful news in the small cap space today, we wanted to take an opportunity to focus on the major markets as a whole and give you what may be a much different editorial view of what's going on right now than what you're likely going to find anywhere else. Since we tend to filter out much of what the financial media's reactive coverage tends to provide investors, I think it's very important to make sure you don't fall into the same trap that many average investors will fall victim to right now, which I'll call "fear based journalism". It's important to understand that the media achieves ratings by herding sheep into thinking either the sky is falling or that you're on the verge of missing out on one of the market's greatest runs in history. The media thrives on extremes, or at least making you think everything is extreme. The reality, in our opinion, typically couldn't be farther from the truth. Case in point, When the market's rallied middle of last week, news pundits attributed the move to Spain's favorabe debt auction. Today, they blame the move lower on Euro woes. Tomorrow, if the market rallies, I'm sure they'll be finding something contrary to today's reasoning. Markets go up and markets go down and if you fall victim to all of the noise, you're likely going to leave a lof of money on the table. I'm sure you've heard the old adage, buy low - sell high, right? Easier said than done especially when you've got to muster the guts to be a buyer when it appears nobody else is interested. Remember... when you're selling, there's always someone on the other end buying and the smartest investors in the world understand when opportunity knocks in the market, you've got to have the intestinal fortitude to step in because that's the root foundation for above average returns. The point I'm trying to make here is as long as everything is making sense, it reallly doesn't matter if the markets are going up or down. What matters most is positioning yourself for what the markets are going to do rather than basing your decisions on what the market has done and what the media has decided will achieve high ratings. Now let's dig in... The Market is Acting Efficiently... Good. The markets were very logically due to sell off as a result of the major indexes reaching a critical and very logical profit objective, which we've communicated to you many times over the last month or so. We told you well before the selloff started that it was coming and it has. We've also suggested many times lately that buying index put options when the markets rally intraday and closing them out when the market moves lower could be a great way to hedge against your long-term portfolios and/or scalp some short-term profits. Now I'm not reminding you of this to boast our genius, I say this only because as long as things are making sense to us, there's no need to panic or be afraid when the market is moving lower. As a matter of fact, it excites us more than anything to know that when the markets start to shake investor confidence, that's the perfect time to position for the long-haul as long as you have a good idea where the markets may be headed. We still have no clear signal in sight that would suggest this market is done surprising investors to the upside yet again. However, I don't think we're quite done finding a base for the market to move higher just yet either. I've included a weekly chart here of the NDX that shows you this market is only in a pullback phase right now which is absolutely good for the markets to move higher. You'll see the weekly chart has simply traded below the 3X3 for only one week now. Usually, in a thrusting market like we've had for months now, when a stock or index breaks below the 3X3 it usually finds its way back above the 3X3 within three bars, whatever the time period for your chart is. In this case it would be three weeks or so. Bottom line is we're likely going to know over the next three weeks or so if this market is going to move convincingly lower or if its going to find a base and start moving higher once again. I've included some retracement levels in the chart as well pointing us to where this market may want go should the weakness continue. The 3/8 retracement level would be our first line of defense which would put the NDX somewhere around the 2508-2572 level. The good news is what we're seeing right now is a bit of an early seasonal selloff which leads me to believe maybe the summer is going to buck the normal seasonal trend of consolidation and actualy catch many vacationing investors by surprise when they return to find out that the markets have left them behind. That would make perfect sense since Obama is likey going to want to figure out a way (however he can) to ensure this market is doing very well while he's on his mission to get a second term in office. Yes, now I'm specualting on the verge of conspiracy theory but don't think for one second that it's all that far from the truth... Obama has every reason to lead the American population into thinking he's been great for our economy. Why? Because there are a lot of very smart people that suggest his policies have done nothing but delay the inevitable financial armageddon. Now that's not something I'm going to provide an opinion on either way because I'll let the market decide that for us. The market is always right and as long as we're willing to spend the time to read all of the tea leaves at our disposal, there's a good chance we'll know if this market wants to implode or move higher well before most. See ya' tomorrow...