With the third quarter earnings expectations bar being set much lower now and economic data coming in a little stronger than in previous months, we're experiencing the bounce across the major indexes we mentioned and were anticipating yesterday. The NASDAQ found short-term support off of the levels we pointed out in yesterday's edition and just as we suspected, the bounce has been pretty fierce so far this morning. Good for the overall picture no doubt, however, one good day does not reverse the recent trend, but it sure does help the cause. If you missed yesterday's edition, this market needs to find a base and move higher if the longer-term charts are going to stay intact. It's important not to get overly exuberant though at this point based on what you're seeing across the markets today. There were some big earnings indicators this morning though with Goldman Sachs, Coca-Cola, Johnson and Johnson, United Health, Domino's Pizza, PNC, State Street and Mattel generally lifting the tide, but we've still got IBM, Intel, Cree, CSX and Intuitive Surgical reporting after the close today. It's really not as much about the numbers as much as it is how the market reacts to those numbers right now. I suspect we're going to see a fair amount of volatility while the indexes make an attempt to put in a bottom we can work with for longer-term ideas. For now, continue to be opportunistic and take profits when they stare you in the face. If you got long some index options, such as the QQQ's, SPY's or DIA's, yesterday on the heels of our commentary, congrats, you should be well in the money today. As for the four stocks we mentioned worth considering on their recent pullbacks, no green or red to speak of except for MNKD, which is experiencing some strength today. Those small cap ideas may take some time to pan out, so if this market continues to rally, we can probably assume those ideas will go with them. As I type, the NASDAQ Composite has already retraced 3/8 of the complete move lower, which started a few weeks ago. I've included a daily chart here showing you what I'm referring to. In a perfect world (which we're far from that these days), we'd like to see the NASDAQ break above the 5/8 retracement level, which would put the index above roughly 3135. A test and break above 3171 could spark a pretty furious rally that would leave many doom and gloomers scratching their heads. Remember, in a market environment like we have right now, anything can happen. I would assume if we're going to achieve the levels I've mentioned above, we're probably going to get some volatility in the process. Let's not worry so much about what happens with intraday activity as much as we focus on the levels we continue to talk about on the NASDAQ Comp. and the NDX. The flip side of this bullish commentary is if for some reason this current rally results in nothing but a dead cat bounce, let's use yesterday's low as the backstop to reassess what's going on. We're going to continue to lay low on new ideas until we see if the markets position themselves for a whole new leg up. If and when we get confirmation of that, we'll start getting much more aggressive with small caps we believe will outperform. Stay tuned...