You know, it's days like today that can really mess with your head. The market's pullback - within sight of record highs, no less - feels like it's the beginning of a relatively significant pullback. Don't fall into that trap, though. While it may have been rough, the reality is, Tuesday's tumble didn't actually create any kind of real opening for the bears with most of the market. In fact, it may have been just what the doctor ordered to maintain the attempt to get a true breakout started. Check out the chart of the S&P 500 below. Yes, it looks like the ceiling at 1885 did its job by repelling the bullish effort before it got started. Even with the 0.9% slide, however, the S&P 500 still held above its major support at 1863... the 20-day and 50-day moving averages. This isn't to imply that the S&P 500 is going to start a recovery tomorrow and then blast right past 1885 with that effort, although nothing can be ruled out at this point - it's entirely possible we could just brush the 20-day and 50-day moving average lines on Wednesday and start the kind of bounce we did when the same thing happened a couple of weeks ago (and this time follow-through on it). After all, the volume behind today's action was light, telling us there weren't a lot of sellers looking to get out here - there just weren't many buyers. It's all simply to say that even with today's selloff, we've not started yet-another pullback. Yes, the low VIX is still bugging me. I may be forced to concede soon that the low VIX simply means volatility is going to be minimal for a while, and nothing more than that. Before any of you get your hopes up, however, may I show you a chart of the NASDAQ? It's not nearly as hopeful. Yesterday we explained that the NASDAQ was being pushed into the point of a semi-major wedge, and whichever way it broke out of that pattern would likely be the beginning of a more significant move in that same direction. Well, it ended up being the lower of the two confine lines that yielded today, with the composite losing 57.3 points (-3.38%) to close at 4080.76. I honestly can't say I'm ready to be a bear here based on the chart. Were it a different time of year or against a different backdrop, I probably would take the one-day breakdown clue at face value. We're in an exceedingly choppy environment though, and the NASDAQ could easily meander for a few days before picking a direction. Bottom line? The S&P 500 still offers hope, and the NASDAQ... well, it's not quite as hopeful. I really think the smart-money move here is to not make any firm trading conclusions. Cash is still king for now. The good news is, that could clearly change by the end of this week. Stay tuned. Putting This Go-Nowhere Market in Perspective With all of that being said, a Q1 earnings update is the perfect segue into a much more important message - in the grand scheme of things, our short-term dissection of the market means very little. In the end, the only thing that really matters is earnings, which is why we make a point of keeping tabs on the market's bottom line. So... It's been about a week and a half since we updated our earnings scoreboard for the S&P 500, mostly because the reports were flowing so fast this week and last week that the data was already dated by the time we could get it out to you. Well, with about 3/4 of the S&P 500's companies having posted Q1's numbers now, we can finally get a good grip on where things are. And where are things? Not great. Not bad, but not as strong as they were supposed to be for the first quarter. As of late last week, the S&P 500 is on pace to earn $27.15 for the first quarter of 2014. That's more than a tad lower than the projections of $27.60 we were working with right before earnings season began, though it's still 5.3% higher than the year-ago figure of $25.77. You can also see the trailing P/E ratio now stands at 17.3. That's high, but not completely unpalatable. Make no mistake, however - investors are willing to be owners here not because of trailing values, but because of the expected growth rates that should be kicking in beginning with Q2's results. The forward-looking (12 month) P/E of 15.0. Honestly, I don't see how Corporate America is going to turn up the heat starting right now if they couldn't do it before, but there's a clear upward pivot in the "actual historical" earnings and the "projected" earnings for the S&P 500 [where the green arrow is placed]. I hope my skepticism is off-base. Anyway, when you drill down into the market's earnings for last quarter and start examining its key sectors, a few odd things popped up this time around. First and foremost, healthcare and consumer discretionary stocks grew their bottom lines the most in Q1; telecom and utilities don't count due to some very skewed and misleading math. Both the healthcare and the discretionary sectors also extended respectable growth streaks in the first quarter of 2014. That may be why both are trading at higher-than-average valuations right now. The biggest disappointments so far are technology - which surprises me - and energy, which doesn't surprise me in the least. I think I mentioned the last time we looked at marketwide earnings that expectations for energy earnings in Q1 were ridiculous, and sure enough.... As for valuations, I know the financial sector's earnings growth appears to be slowing here, but I can't stress enough that Bank of America's results really made the group look much worse than it should have last quarter. If you're looking for value, start your search there. My favorite sectors for the long haul? Consumer discretionary stocks and industrials. I know both are priced higher than the current market norm, but you have to pay for quality. They've both shown consistent growth for over a year now, and both tend to do well in the "maturity" phase of an economic expansion (which is where we are now). It's no coincidence that a bunch of the names I'm mulling for our next trades in the SmallCap Network portfolio come from these sectors, even though I wasn't specifically trying to find winners from those two groups. They just showed up as potential candidates. We'll look at them at a later time. Good Stuff Finally, there were more posts at the site today than we usually get, and all of them were great. Three of them really struck me as "must-reads", however. Maybe you heard about last week's IPO for Papa Murphy's Pizza (FRSH), and maybe you didn't. Either way, if you want a good, unbiased look at a fairly uncovered stock to see how it stacks up against bigger competition in the same space, John Udovich tastes a slice of this newly-minted publicly-traded pizza maker. Bryan Murphy doesn't pull any punches with his look at Office Depot (ODP), which was up 16% on Tuesday - he still doesn't like it for the long haul, and has some good reasons why. Last but not least, Dr. Faessel is back today with his usual pithy look at, well, everything, but an examination of a confirmed Dow Theory signal was today's focal point. This time, he muses, it may be different, well aware that the "this time is different" mentality can be trouble. If you want a GREAT wrap-up of investor sentiment and how that impacts stocks, this is it. That's it for today, folks.