OK kids, class is back in session.... I suspect by now that no matter where you are in the country, school has resumed for the children in your locale. School isn't the only place to learn some new things though. I've got something of a market-based lesson for today that may make a difference in how much market exposure you're willing to take on this week after a reasonably strong end to last week. After that, a couple of updates on our open picks. Yes, stocks saw a huge rebound Thursday, and a small one on Friday, after a strangely placed rally on Tuesday (book-ended by two nasty selloffs). Three 'up' days versus two 'down' days means net bullishness, right? And, with nearly a 20% correction since the highs from April and near-record-breaking mutual fund redemptions in the meantime, the bulls could make the argument that there just isn't much stock left to sell. I don't disagree with the idea, but there's still a big difference between 'not bearish' and 'bullish'. See, there's a middle ground of 'not interested either way' I've got a feeling is going to be the case for a few weeks longer, now that traders have been shell-shocked. In some ways this is the most dangerous situation of all, as it allows the market to ebb and flow in a way that looks bullish or bearish for a bit, but is actually neither. Since it's going to matter as I make my point, I'll remind you that my forecast for the next sex to eight weeks is lots of volatility... in both directions. On a net basis though, I don't see any real change unfolding. Rather, I expect the market to reverse a few times right around the time it looks it's finally gotten up enough steam to really start rolling. I submit two pieces of evidence: Anything that happened after Monday. Last Monday was the worst of the worst, with stocks plunging 6.7% that day. The perma-bears held up the selloff like a trophy, gleefully saying it was just a taste of what's to come. Over the course of the rest of the week, stocks regained 5.2%. Lesson learned: Never assume the current trend has to last. While the market was indeed making bullish progress over the last four days of last week, there was a missing ingredient... volume. The selling volume easily ramped up on the way down, but the rebound volume has been getting even weaker on the way up; this bullishness is not necessarily majority opinion. We need more buyers to keep the bullish trend moving. If we don't get 'em soon, the bottom's going to drop out again from the current bullish effort. And how much more - if any - upside is left in the current bullish wave? Don't know. This is more psychology than anything else right now, and the psychology is changing by the hour (fueled by a rapidly changing political outlook and socio-economic developments). I do think we'll see a little more upside to kick things off this week. When we start to hear the "gotta buy now" on every news TV station we flip to though, that's when I'd get prepped for another pullback. Conversely, when you start hearing the "gotta sell now" mantra everywhere you turn to after the next pullback, that's the cue for the next bounce. Like we said in the newsletter a few days ago, we're selling and shorting into strength, and buying (long-term) on pullbacks, for the next few weeks. Just FYI, it took four nasty pullbacks and four subsequent rebounds for the market to work its way though the post-Flash Crash crisis in the middle of last year. I suspect we'll have to go through that cycle three or four times this time around too. Now, as far as our stocks go.... Trade Updates We actually devoted a whole edition to this on Thursday, but it's important enough to repeat now - Lihua International (LIWA) has been confirmed to be everything it says it is. A recent report from China 360 Solutions LLC verifies that this company is for real, trumping a small army of nay-sayers who think since some small cap Chinese stocks were/are frauds, then they all are. That's just wrong. You can read China 360's complete report on LIWA from our Lihua International research page. Just look in the left hand column fir 'LIWA Research Media'. This name continues to be one of the market's best-performing names too... a relative strength that bodes well for the foreseeable future. And for good reason. After last quarter's official numbers were filed and analysts had time to update their 2012 outlook, the forward-looking P/E is now - and this is totally legitimate - a mere 2.86. The trailing P/E of 5.2 would be good enough for me. Speaking of second-quarter numbers, don't forget Elephant Talk (ETAK) will be hosting its Q2 results conference call on Tuesday, August 16th, at 11:00 am EST. Anyone interested in participating should dial 1-877-941-8418 if calling within the United States or 1-480-629-9809 if calling internationally approximately 5 to 10 minutes prior to 11 a.m. Participants should ask for the Elephant Talk Shareholder Update conference call. Or, if you're more of a web-based person, the call is being webcast by ViaVid Broadcasting and can be accessed at either Elephant Talk's website at www.elephanttalk.com, or ViaVid's website at http://www.viavid.net. To access the webcast, you will need to have the Windows Media Player on your desktop. Finally, though it hadn't been a lot of fun to own Bering Exploration (BERX) of late, things changed in the middle of last week. After a drastic - and still mostly unexplained - selloff between August 3rd and August 10th that drove BERX from $0.61 to $0.23, the bulls came fighting back to push this small cap explorer back up to $0.35 to end the week. And, the effort left some nice momentum behind to get things started today. I'm still not sure if the broad market's action had a little to do with it, or everything to do with it. At this point though, it doesn't really matter. What matters is that the only thing that's changed about Bering Exploration since before August 3rd is that it has a new prospect in the Permian Basin that could be holding 950,000 barrels of oil ($88 million worth), and that it's now drilled 6000 feet (down) as part of the re-entry into Chicas Locas #1 well. From here it will start to perforate at that depth, and whatever oil is there should be found within a few days. Either way, the stock's much easier to view as a bargain now that it's on the way up again, off of multi-week lows. Have a good one - talk to you in a few days. Be sure to check your inbox Wednesday.