Welcome back, everybody. We trust you had a nice Labor Day weekend. It's time to get back in the saddle though, so... What a day! The market was up more than a full percentage point early during Tuesday's trading session, celebrating news that military action in Syria would at least be delayed a week while waiting for Congress to reconvene. I have to think at least part of the rally was also fueled by assumptions that our armed forces may not step foot in Syria at all. When it was all said and done, however, the euphoria faded pretty quickly and stocks lost a ton of the ground they had gained early in the morning. What happened? Chalk another one up for the "news-based, knee-jerk reactions are always eventually trumped by reality" theory. Avoiding a war is certainly good news, but we were already not at war - that didn't change (and it's not like stocks totally tanked at the end of last week when we first thought a military conflict in Syria was inevitable). On the flipside, the reality is, stocks are still overbought and ripe for a pullback. In fact, they may be even riper for a tumble after today's action. I'll show you why in a second. First we need to take care of something that bugged me all weekend. New Pick Just as a reminder [or in case you missed it in Friday's newsletter], we dumped Commercial Metals (CMC) from our mental portfolio at the end of last week. While we still like the idea, shares plunged under several key moving averages on Friday and we had to dump it before it went from bad to worse. You know what the first rule of trading is... never let a small loser turn into a big one. What's bugging me isn't being forced out of a stock I liked - that's just life. What's bugging me is how bailing on the Commercial Metals position whittled us back down to just four open trades. Not that we have a specific number we're trying to maintain, but I'd like to keep more than four on our plate, you know? Ergo, just so I could start getting some sleep again, I'm adding another pick to our mental portfolio today. It's (and sorry for the lack of fanfare) Global Indemnity plc (GBLI). Don't sweat it if you've never heard of it. With a market cap of only $626 million it's not like GBLI turns heads and makes headlines. I swear though, I've made much more money with these small, obscure, almost-goofy names than I've made trying to compete for popular and crowded ideas like Apple (AAPL) or Tesla (TSLA). Anyway, Global Indemnity is a specialty property insurer, and a reinsurer. While you may have never heard of it, you probably have heard of at least one of its four key divisions: Penn-America Group, Diamond State Group, United National Group, and J.H. Ferguson & Associates. The names and details of the company are academic to me and you, though. What matters most right now is how the market currently underestimates the company, but those same investors may well be on the verge of discovering just how much they underestimate GBLI. Simply put, Global Indemnity has not only grown its income at a pretty good clip for the last year and a half, it's gotten in a habit of doing even better than expected. The earnings-growth chart from cnbc.com shows us - after a miserable 2011 - an earnings rebound and six earnings beats in a row. I know the earnings outlooks for the next six quarters don't look all that thrilling, because they don't show any real growth. I'll just remind you how GBLI has topped estimates in each of the past six quarters. I don't know why the company would stop topping estimates now. That being said, there's a reason I'm suggesting Global Indemnity plc to you right now... the chart's acting like it wants to accelerate, spurred by a bounce right where we'd want to see one. I'm going to show you a daily chart as well as a weekly chart of GBLI, just so I can fully make my point. Don't worry - I just have one comment to make about each. On the daily chart, I like the way the bigger uptrend has developed, and I love the way the recent pullback was stopped and reversed right at the 50-day moving average line (purple) last week. We can get in before what I think is going to be another leg of the bigger rally. As encouraging as that is, even more encouraging is how the weekly chart is showing the stock's already in a long-tem uptrend. I just wish I would have found it after one of the deeper-cutting pullbacks before now. But, it'll be alright. What I'm hoping for is another quick 20% surge like we saw in early July, or maybe even a bigger one like we saw in 2011. While we may not get it, at least we're taking a low-risk swing on the idea; Global Indemnity shares are still in an uptrend whether or not we get a big pop. The question is, what will we do with the position when-and-if we get a quick runup in the very near future? Answer: Like we explained in today's headline, we're leasing the stock with an option to buy, meaning we're only entering it as a short-term trade right now, but will consider hanging onto it for the long haul once we get a big jump. It's all going to depend on how things are looking at the time. By the way, it's not a bad mindset to adopt for all your trades. Now, that brings the trade count back to five open positions here in the hypothetical SmallCap Network newsletter portfolio. I'll try and bring you some more soon, as I know five just isn't enough to do you as much good as we'd like to. The thing is, I don't know when I'm going to get a chance to put 'em on your plate, which brings me to say this once again... if you're looking for more stock picks to fill up a portfolio, you're going to be far better off tapping into the brilliant work the guys over at the SmallCap Network Elite Opportunity are doing. Stock picks, market insight, you name it - if it's got to do with equity investing, the SCN EO is the creme of the crop. If you don't believe it, take the free two-week test drive. Here's how. Or, copy and paste the following link in your browser: http://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=SCN+Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ Now, about today's crazy swing... Irrelevant Progress This won't take long, because when it was all said and done, the market didn't make any meaningful net change on Tuesday. It did, however, give us another subtle clue about the way traders are thinking, and that's just as important. I've lost count of how many times I've recently told you the one thing worse than a market that's not making any progress is a market that makes progress but can't hang onto it. Each time those buyers are teased, more of them get discouraged to the point where they don't even bother coming back. Well, that's what happened today. The indices jumped on the Syria news, but then faded when traders remembered stocks are overbought and overdue for a correction. We'll skip looking at a chart of the S&P 500 today and simply let you know the floor at 1627 is still intact. We'll instead turn all of our attention to the chart of the NASDAQ Composite, which is telling the same basic story. As was the case with the S&P 500, the NASDAQ still hasn't broken under its key floor at 3576. That's good. Unfortunately, that's one of the few good things we can say about it today. Yes, the composite closed higher for the session, but all it took was a brush of the 20-day moving average line at 3631.64 to almost instantly send the NASDAQ back-pedaling You'll also see the NASDAQ Composite's Volatility Index (VXN) edged a little higher even though the market closed higher too. The VXN should move lower when stocks are moving higher. The fact that the VXN is inching upward suggests traders are thinking defensively - and even playing defense - even though the market indices themselves are still moving higher. It's a problem, as the VXN's hints have more merit than the hints usually dropped by the market's indices. The bottom line is, we're still trapped between a rock and a hard place, though we're one step closer to falling out of those confines. Stay tuned. This week could get real interesting real fast.