The market as a whole continued to vex traders on Monday. We can't say it's surprising, though we can saw a few other things about today's wishy-washy action. We'll have the usual market discussion below. The first item we need to take care of is an explanation of this newsletter's odd headline. Two Small Caps We're Falling in Like With It's been a while since we've had a chance (and time) to do this, but today we're going to add a couple of names to our watchlist. Our watchlist isn't a list of stocks we officially have trades in. If we love a stock enough, it WILL go into the hypothetical portfolio. Stocks on the watchlist are just names we like well enough to keep following for a while, to see if they can earn our love and be promoted to the portfolio. We have anywhere from two to ten stocks on our watchlist at any given time. No fanfare is necessary. The stocks we want to start watching very closely as trading ideas are Bemis Company (BMS) and Federal Signal (FSS). Both are small caps, and yes, both are more than a little obscure. That's the whole point. Bemis Company is a packaging goods company. It sells paper, foam, plastic, and the equipment needed to turn those materials into a variety of containers. Business hasn't been great for Bemis since 2011. That's when sales peaked at $5.3 billion; the company's done $4.96 billion in sales over the past four quarters. The pros don't think next year is going to be any better on the sales front, and only slightly better on the earnings front. In fact, the company is shedding its pressure-sensitive materials business to better streamline itself and focus on what it can do well.... and profitably. Most of the time the shedding of divisions is a last-ditch effort from a company survive, and often proves pointless. In the case of Bemis Company though, there's a bigger - and better - turnaround effort underway aside from the shedding of its pressure-sensitive materials venture. Bemis has also "reconfigured" a big chunk of its management team, which tends to happen at a pivot point for an organization. If anything, the rate of earnings growth could accelerate now that Bemis is refocusing. What will push me out of "like" and into "love" with BMS is if the stock wiggles its way out of its current wedge pattern... bullishly. It's not an unreasonable expectation. This stock has a history of being hot and cold, and it's been cold for a while. It's time for a hot phase, and the entry into the tip of a wedge shape could be a trigger. As for Federal Signal, it's in a similar technical situation as Bemis Company... with a twist. In recent months it's formed a wedge shape, but this wedge shape is looking like the tail-end of a very long-term cup-and-handle setup. The brim-line at $16.00 could be catalytic, if FSS can clear it. Just for the record, however, I'd be willing to get into FSS without a break above $16.00. What you can't see on the low-detail long-term chart is that this stock has consolidated around $15.00 over the past several weeks. All the key moving average lines have converged, and the ceiling at $15.08 is now staring to crumble. That may be enough to sling-shot the stock out of a lull and back into rally mode. We'll see. Federal Signal makes and sells all sorts of industrial equipment, ranging from street-cleaners to firefighting equipment to communication hardware. As you can see on the chart, earnings come and go. I think the earnings tide is in the midst of turning permanently for the better, however. Per-share earnings are expected to rise from $0.86 last year to $0.96 this year to $1.02 next year. Sales are projected to grow 6.1% this year and 5.1% in 2015. The forward-looking P/E of 14.8 doesn't leave a ton of room for more upside, but Federal Signal has been more apt to beat earnings estimates rather than fall short of them recently. The numbers should be better than analysts are saying. For those of you who've been reading the SmallCap Network newsletter for a while, you know how this works - we may or may not add BMS or FSS to the portfolio at any point in the foreseeable future. If you were to go ahead and act on either idea on your own though, you wouldn't be alone. Any stock that meets our strict set of criteria well enough to make it to the watchlist is a solid play no matter what. If either goes into the officially-unofficial SmallCap Network portfolio, it'll be crystal clear in a future newsletter. In the meantime, if you need more stock picks, this is a much better choice. We've got three names in the portfolio right now, whereas these guys currently have nine open positions (with more in the hopper). On Borrowed Time Do you ever get the feeling some greater power is watching you while you watch the market, and makes stocks do things that are amazingly frustrating? Sometimes I wonder. Yes, Monday's action was another day spent on the fence, with the bulls unwilling to take the ball and run with it, but with the bears equally unwilling to take a stand. Forget the S&P 500's 2000 mark for the time being. Instead, let's focus on the floor around 1990 and the ceiling around 2010. The index closed right in the middle of that recent range today, peeling back from a strong open. The VIX was equally indecisive, ending the session above its 20-day moving average but below the 50-day moving average line, and right where it's closed for the last several days. The same thing can be said about the NASDAQ and the VXN; no need to even look at that chart. So what's the call when the arrow points in one direction as easily as it points in the other? We remain on the bearish side of the fence, but we're armed with a minor piece of evidence to that end. The charts were about to show you are images we've shown you before. They're just updated with today's data. They're charts of the New York Stock Exchange's up volume and down volume, and the NYSE's advancers and decliners. More up volume and more advancers are bullish, while more down volume and more decliners are bearish. As before, we're not interested in the daily data, which is too volatile to worry about. We're interested in the trend for each data set, which in this case is indicated by a 20-day moving average line. Now take a look at the same data with the up volume and down volume trend data overlaid, and the advancer and decliner trend data overlaid. Technically speaking, while the trends are still technically bullish, at their current rate we'll flip to a bearish breadth and depth situation in a few days. I'm showing you these charts again not to hold up as conclusive proof of brewing bearishness. Truth be told, it's far from conclusive. It's en route to becoming conclusive, however. If the moving average lines cross one another - as they're on track to do soon - it could be a lot more conclusive in a hurry. I'm just showing you these charts now to add to the discussion over whether or not the undertow is shifting for the worse. Breadth and depth tend to turn before the market itself does. We still haven't seen a convincing breakdown - only a break under 1990 is really going to push the S&P 500 over the edge. We're getting there though. As always, we'll be able to lay another piece of the puzzle tomorrow. I'm telling you though, this market is hangin' by a thread even if it feels like it's on solid ground here. Oh, and don't forget tomorrow is the day Apple (AAPL) is supposed to unveil..... well, unveil something. The pros say the 1 pm EST event is being hosted to unveil the newest iPhone and/or the iWatch. As for what this may mean for AAPL stock, you may as well toss a coin. I looked back at all the past major product announcements from Apple, and there was no rhyme or reason - near-term or long-term - from the stock. In the grand scheme of things, these events seem to simply inject a lot of short-term noise into whatever's in the cards for the stock. You'd think these big, splashy headlines would make or break the stock, but they don't. So what's the bigger-picture look like for AAPL? We can't get into that discussion today, but I will tell you John Monroe established a firm target price for Apple in today's Elite Opportunity newsletter. He wisely did NOT say when it might happen or predict the path it would take to get there, understanding how Tuesday's hoopla could stir the pot for a few days. He's got a bigger-picture number in mind, however, and I can't say a disagree with it. If you want the EO's target price for AAPL, it's a great reason to use your free offer for a two-week trial. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/