Welcome to the weekend, everyone. Against the odds, today stocks managed to renew the rally we all enjoyed during the latter half of October and early November. As of now, the S&P 500 is up 13% from its October 15th low, hitting new highs on news that both China and Europe were taking a dovish stance on their respective economies and vowing to put some stimulus in play. For the Euro-zone, that meant more asset purchases, but for China, it meant an interest rate cut. Both are positives. The American market went hog wild, of course, buying stocks indiscriminately on nothing more than a mere reflex to good news. And, I suppose the "if-->then" premise of buying stocks because of global stimulus makes basic sense. I tell you what though... if there was ever a chance to fake investors out [as we discussed yesterday], this is it. In fact, it wasn't 30 minutes after the opening surge that we began to see hints a fairly important top was being made. Don't jump to conclusions yet! Some other things still need to happen first to really seal the deal on a meaningful pullback. As John Monroe over at the Elite Opportunity told us in the snippet from yesterday - as well as in today's newsletter - to EO members, a rollover or breakout from Thursday's close was going to at least be a two-day event. The first day would likely be the head-fake, and the second day would be the beginning of the actual move about to unfurl. Today looks like it may well be the head-fake, meaning the next downward move from here could be the onset of a good-sized pullback. We'll explain exactly what we're talking about below, with pictures. We'll also borrow a little more of John's commentary from Friday's Elite Opportunity newsletter to aid in explaining the situation. The first thing we want to take care of today, however, is a look at the stunning - though not surprising - move from MCW Energy Group (MCWEF). It was only up about 46% today. Wow! Oh man, I hope you happened to browse the website sometime before the close of trading yesterday. If you had, you may have come across Bryan Murphy's commentary about MCW Energy Group's technology being featured in Bloomberg's Business Week, and why it could be so catalytic for the stock. Sure enough, the stock took off today as readers of that publication - print and online - read the article and decided to make an investment in what the company's doing. It's a scenario I've seen play out time and time again. For those of you who've been part of the SCN community for a while, you may have realized there's a lot more great stuff posted at the website every day than we get to discuss here in the newsletter. If you're willing to check out the site, you can glean some tips and hints like the one preceding a big pop from MCWEF. If you're not reading the home page every day, you really should make it part of your daily repertoire. OK. Let's get on with our look at the market. It's a bit of a doozy today. Step 1 Complete I debated quite a bit about how we wanted to present or analysis to you today, and after careful thought, I think the first thing we want to make clear is how even though today has the makings of a market top, unless the right things happen early next week, today's clues are irrelevant. Fair enough? Great. Yes, the market hurled itself higher today - gapped higher, actually - on news of Chinese and European stimulus. The market's inability to hold onto the bulk of that gain, however, is alarming. Stocks began to pull back beginning at 10:00 am EST, and though there was a modest rebound effort beginning at 2:00 pm EST, interest and enthusiasm deteriorated rather quickly. It's a worry, because that's how a significant top would normally materialize... with a proverbial last hurrah from the buyers immediately followed by profit-taking from the folks who think "enough is enough already." Once the profit-taking floodgates are opened, it's mighty hard to close them. The NASDAQ didn't open at or near its low for the day the way the S&P 500 did, but the message is still the same here - once the market opened higher, the potential profits were so good nobody could pass up locking them in. Specifically, once the composite bumped into its upper 20-day Bollinger band, the index began to slide lower. Interestingly, the VXN only had to touch its lower 20-day band to start edging higher. The VXN still needs to move much higher to get into bearish mode, but it all starts with that first step. The big line in the sand for the NASDAQ is still 4657. The chart I really want to focus on (again), however, is the Russell 2000, primarily because John Monroe made a lot of sense of it again today in the Elite Opportunity newsletter by saying: "...if the Russell can somehow break above last week's high at any point over the next couple of days, we're likely looking a strong move up across all of the major averages. However, should the Russell not be able to make a new high and more importantly, can close above the [key moving average line] which currently now sits at 1,169, and then close back below it on Monday, that move would trigger a potential sell signal in small caps. Let me say again though, should the Russell start to move lower and provide us with a nice pullback, we'll likely be looking at getting long small caps again in anticipation of a reversal back to the upside at some point over the next few weeks." Does that make sense? John had a lot more to say in today's edition of the EO, but basically it's an extension of yesterday's discussion about how the market needed to move a little higher to set up a pullback, or needed to move a little lower to set up a rally. Through a surprising set of circumstances, stocks moved higher today and lulled a lot of people back into a bullish mood. It's the ideal setup for a big pullback because nobody would see it coming.... well, nobody besides us. Oh, and here's the chart of the Russell 2000 so you can see what we're talking about. The Russell managed to shrug off the first pullback seen over the course of late last week and early this week. I've got serious doubts about investors ignoring another key breakdown early next week though. We'll just have to see how it all plays out, and how 1169 fits into the picture. I'm not particularly enthusiastic considering today's failure to follow-through though, as it's not like the bulls left themselves anywhere to go but down. Sure, it's possible stocks could drift a little higher from here, but even that upside is going to be limited because... I know this isn't a popular argument against getting into stocks at this time, but as of today's close of 2063.50 the S&P 500 is valued at a trailing P/E of 17.98 and a forward-looking one of 15.96. I'm not so sure more stimulus from China and Europe is going to improve the earnings outlook. I think the earnings outlook for the S&P 500 was based on a certain level of economic strength from those two regions, and the stimulus plans simply ensure those levels are met rather than upping the potential earnings for U.S. companies. If that's the case, then no, stocks aren't even close to being "cheap" here. I have to think investors innately realize this, even if this knowledge doesn't seem to be impacting stocks just yet. 'Nuff said for now - Monday (or maybe Tuesday) is going to be the pivotal day for the market. Let's check in then. Hey by the way, while we got waist deep into the analysis of the market today, if you want to be a fully-submerged trader, you really need to read what John Monroe gives to Elite Opportunity members every single day. The snippet you read above? It doesn't even scratch the surface of the kind of detailed and actionable advice John's been doling out. Best of all, the Elite Opportunity newsletter is delivered in the middle of the trading day - when you can do something about it - rather than at the end of it. Here's how to become a member, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/ Have a great weekend, folks!