Good Thursday afternoon, everyone. How are things? Hopefully they're better for you than they were for the market on Thursday. Though stocks opened in the black today - suggesting Wednesday's weakness would soon be reversed - it didn't take too long for the bears to take control again and log a third straight losing day... even as slight as today's loss was. The S&P 500 has now lost ground in five of the past six trading sessions. And yet, the index isn't past the point of no return. It's close, but not quite there yet. Ditto for the NASDAQ. The composite is teetering on the edge of a meltdown, but the bears don't have the guts to cross the line they need to cross that would suggest they're committed to the idea of a pullback. That's the long way of saying there's still a way the bulls could salvage things from here. The daily chart of the S&P 500 below explains what I mean. As you can see, although the S&P 500 is in a downtrend, it's yet to break below what's becoming a major floor around 2040. That's where the 50-day moving average line (purple) and the lower Bollinger band have converged. We can't assume anything further until the index breaks below that support. Augmenting the "wait and see" line of thinking is the fact that the VIX continues to struggle at its upper Bollinger band. Until the VIX clears that, the bulls don't have a great deal to worry about. I know some people will look at that and say it's just a coincidence charts seem to stop and start at what end up being important technical levels. I'm telling you though, after being in this business for nearly two decades, there are no coincidences. There are plenty of times when things are happening and we as investors don't understand why they're happening. There are no coincidences though. And in a case like this where the market behaves as if the key technical lines do matter, we have to respect what we're seeing even if we can't identify the reason we're seeing things. Here's the daily chart of the NASDAQ Composite. Same deal. That is, the index is putting pressure on support at its 100-day moving average line (gray) as well as its lower Bollinger band, but it's yet to break under either of them in a decisive way. You'll also see the VXN is either unwilling or unable (or both) to edge above its upper Bollinger band even though the VXN has broken above its 50-day moving average line (purple). In any case, it's not hard to figure out exactly why the market hit a wall a couple of weeks ago, even if investors don't consciously know why they're doubting the future. While You Weren't Looking We've talked about this before, but it bears repeating now in light of the brewing pullback we've seen materialize since April 20th - the long-term earnings outlooks have once again been reeled in as new data from Q1 earnings season has been assimilated. As of the end of March, experts were expecting the S&P 500 to earn $118.12 per share in 2016 and earn $135.95 in 2017. In just five weeks, those outlooks have been scaled back to $115.48 and $135.06, respectively. Based on today's closing price of 2050.63, the S&P 500's 2016 P/E ratio has grown from 17.32 to 17.76. The forward-looking P/E (2017) has grown from 15.08 to 15.18 (and actually, the P/E ratios were even higher at early April because the market had yet to peel back from its value then). The market is pushing its luck with a near-term P/E of 17.3. A near-term P/E of 17.7 is just too much. The same goes for a forward looking P/E of 15.0 (at the time) when it gets changed to 15.2. Those are seemingly small changes, but they're a big deal to investors who already feel like they're taking on a good dose of risk. Never even mind the fact that history shows earnings projections are almost always scaled back as their due date approaches. I think maybe without even knowing it, investors as a group realize the trailing and projected earnings trend after these revisions don't quite justify the average stock's current valuation. The question is, how much of an adjustment will the market need to impose? Now What For The U.S. Dollar? Last but not least, since we opened this can of worms several times over the past few weeks, we felt it was only fair to give you an update of the chart in the meantime. I'm talking about the U.S. Dollar Index and it's breakdown last week. As you may recall, the index pulled under the last of its meaningful floors at 93.3 on Friday and continued to edge lower on Monday. On Tuesday of this week we saw the index form a hammer-shaped bar, suggestive of an upside reversal. Sure enough, the greenback has rallied in the meantime, making a great move higher today. Now what? It matters, because oil has been at least partially been on the rebound of late because of the dollar's demise. If the U.S. dollar is now back in the uptrend Tuesday's reversal bar would suggest, a lot of things are going to change for a lot of categories. This may include stocks, as many companies stand to benefit from at least a slightly weaker dollar. This is one I'm going to punt on, and defer to the good judgment of the Elite Opportunity's John Monroe. His newsletter today was all about the U.S. dollar, where it was going, and the subsequent ripple effect it may have on the instruments most subject to the greenback's trend. Today's subject line for his newsletter? "Commodity Pivot Points - Dollar Strength A Head Fake?" He went on to answer his own question, laying out a specific target for the dollar as well as making the near term and long-term directional call on our home currency. Get more out of the market by capitalizing on opportunities that aren't readily visible. Sign up for the Elite Opportunity today. Here's how, or simply cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/