We always love Fridays because they lead us into the weekend, but somehow this particular Friday was a more welcome end to the trading week than usual. It wasn't a bad trading week. Friday even ended up pushing us back into the black for the wee, though just barely. It was just one of those weeks where....well, it was annoying. We got within inches of a breakout, but once again the buyers got reeled in. Now we're back on the fence. (Sigh.) Advertisement Today's Top 10 Penny Stocks - Free List Just released! This complimentary list will continuously rank today's top 10 stocks under $10 using MarketClub's technology and scanning tools. Show Me Today's Top 10 Penny Stocks List Advertisement Yeah, we're going to take our usual look at stocks, but first let's give you a much needed update of some key economic information. Don't worry - there won't be a sermon. We'll just get to the facts and briefly touch on why they matter. Economic Surprises All Around You may recall in Wednesday's edition of the newsletter that last month's producer price inflation rate popped to a multi-month high of 2.1%. Food prices were the culprit for the jump. Until we got April's consumer prince inflation figure, however, we didn't want to jump to any conclusions. So what did April's consumer inflation rate tell us? At an annualized consumer inflation rate of 1.95% - the highest pace since July of last year - paired with last month's increase in the producer inflation rate, it's impossible to say now that inflation is a non-issue. Now, before anyone freaks out, it should be noted that a little inflation is a healthy sign of pricing power; we could actually stand a little more inflation than what we're seeing right now. The hard part (for the Federal Reserve) is, it's tough to put a lid on rising inflation once it's moving. And yes, as was the case with producer price inflation, rising food prices were a big part of the reason consumer prices rose so sharply last month, though fuel prices were an even bigger problem for consumers in April. The annualized inflation rate for gasoline was 2.4% as of last month. I think I mentioned to you on Wednesday that I don't yet see food prices rising to the point of being stifling for the economy. I'm sticking to that basic argument too. For the sake of discussion, however, John Monroe over at the Elite Opportunity doesn't quite agree. He wrote in today's newsletter, "If food costs continue to rise, there's absolutely no way, in my opinion, it can't have a negative impact on retail spending and when you consider our country's economic health relies more on consumer spending than any other country in the world, I can't see the potential for this developing trend to be a good thing, which brings me to the dollar..." Monroe went on to take a more holistic look at things in the rest of the Elite Opportunity newsletter, but you get the idea - he's not dismissing it, aware that the underlying reason for much of last month's inflation has to do with the slumping value of the dollar. On Thursday we got last month's industrial productivity and capacity utilization figures. They weren't great, meaning both fell back. It was the first month in a while that either had pulled back, and one month doesn't make a trend. On the other hand, all big trends start as small trends, so you never know where this could lead. What's so alarming about it is that April was supposed to be a rekindling phase after a rough winter kept a lot of industrial activity on hold. We should have broken out of the gate with a little more "umph." Last but not least, we saw a much-needed improvement in construction activity for April. Starts jumped from an annual pace of 947,000 to 1.072 million units, while permits grew from March's pace of 1.0 million to 1.08 million. As was the case with capacity utilization and industrial productivity, we can't jump to a conclusion based on one month's data, so don't get too excited about a rejuvenated housing market yet. Besides, there's a lot more housing data in the lineup for next week that could be problematic. We'll just have to see. This is a good start to a wave of real estate numbers, however. If we had to categorize this batch of economic data, we'd give it a grade of C. There's a Lot Going on Now To give full credit where it's due, it was today's edition of the SmallCap Network Elite Opportunity that inspired me to make the same point John Monroe did for his readers today. I'll only be able to scratch the surface of what he had for EO readers on Friday, but maybe it'll be enough. Here goes. You know how Jim Cramer so frequently says "there's always a bull market somewhere, and we're going to find it for you"? Most of the time he's right, but let me ask you this - where's the bull market been lately? Stocks? No, you already know the market is right where it was in early March. Small caps? No, the Russell 2000 is down 8% for the past couple of months. Gold and other commodities? Nope. The SPDR Gold Trust is off 7.0% since its mid-March high. The U.S. Dollar? No. The greenback has made any net progress since October of last year, is down 4.5% for the past year, and is still knocking on the door of multi-year lows. About the only place we've seen a bull market of late is in bonds, which are up about 12% since the beginning of the year in step with falling yields. Philosophically speaking, it makes sense - investable money moves around to where the opportunities are (and away from where the opportunities aren't), and most asset classes tend to be inversely correlated with at least one other asset class. It looks like now is the bond market's day in the sun. There's just one problem with the premise right now, however. Right now, the bond market's underpinnings aren't terribly bullish. Bonds seem to be moving higher on a rather rickety platform. This isn't all he said, but Monroe explained in today's edition of the Elite Opportunity: "...something has got to give because I haven't seen anything like this since 2008 but even then, investors wanted gold when they didn't want anything else... if bond buying starts to break down and the equity markets start to break down at the same time, that's not going to be a very good sign because what it would be telling me is nobody wants anything and that's never a good market landscape. However, should bond buying simply continue higher and the markets break down or conversely, if bonds break down temporarily and the equity markets move higher, that would at least suggest an orderly market... ...The best thing that could happen right now is stocks sell off, bonds go higher, the dollar goes higher, food prices start to tame themselves, interest rates start moving modestly higher and gold falls apart. A perfect combination of all of that would suggest to me stocks just need a breather before climbing to new highs again but if for some reason we don't get any of that or a large enough combination of those just mentioned, then look out below..." Like I said, John goes into a ton more detail in his newsletter, but you get the idea - there's a lot going on right now, and some of it really shouldn't be going on. Something will have to change soon, because if it doesn't it could mean big trouble. The market's path to a recovery from here is pretty specific. Now, there are two reasons I wanted to share that snippet from the SmallCap Network Elite Opportunity newsletter with you. One of those reasons is, it's just good stuff for you to know as you navigate this erratic market. The second reason we wanted to share it with you is to demonstrate the kind of bigger-picture thinking that goes on within the SCN EO's strategy meetings. I know sometimes the longer-term, philosophical stuff can be tough to process when the financial media is cramming "take action right now because of this one piece of data" down your throat all the time. I'm telling you though, the people who can look past the short-term noise and get a good grip on the bigger picture are the ones making some serious money in the stock market. That's why the Elite Opportunity focuses on the bigger picture first, and in my fifteen years in this business, I've never seen any other person or group of people "do" the bigger picture better than Monroe and his team. If you're not an EO subscriber, you should be. And if you don't believe it, take the free two-week test drive to find out for yourself. As for the short-term market, since traders seem to have packed it in early for the week and were largely absent today (and who can blame them following another go-nowhere week?), there's nothing new to talk about today. You already knew we were stuck between support and resistance with no real catalysts to whip us out of that lull. That didn't change on Friday. Ergo, there's no need to make a mountain out of a molehill. We just need to remain patient. Just for the sake of shaking things up a little bit, however, we'll swap out the S&P 500 chart for the NASDAQ today - it tells us quite a bit about where we are now. Simply put, the NASDAQ is trapped between a floor at 4044, and a ceiling at 4160. Those are recently-developed lines, and roughly coincide with the composite's 20-day Bollinger bands. Until we break out of that range, we can continue to simply watch from the sidelines. Again - and I can't stress this enough - these floors and ceilings are only short-term lines in the sand for the market. They've got nothing to do with the long-term market, which by the way, we're still fully bullish on barring something bizarre happening with gold, the dollar, interest rates, etc. If you really want a complete, honest, and accurate look at the state of the market, though, I'll remind you that the SmallCap Network Elite Opportunity newsletter hit that nail right on the head today in the EO newsletter. Here's how to get it, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/