Good morning all. The indexes are playing a game of tug of war right now with the DOW, NASDAQ 100 and the NASDAQ Composite all up against two key significant moving averages, the 200 day simple moving average and the 25X5 displaced moving average. The S&P 500 is the only index of the four which has managed to trade above the 200 day simple moving average, but just like its brethren still hasn't been able to breach the 25X5 DMA to the upside. We've covered the definition of a DMA on many occasions, if you're not familiar with this technical tool we rely on so heavily, you can go here to read more about it. As a matter of fact, if you do a Google search on "3X3 DMA", you'll likely see this same article come up first in most cases. We prefer DMAs vs. simple moving averages since DMAs are more leading in nature. I strongly suggest you read that article we published back in March if you're unsure as to what and how they are utilized. With that being said, two of the toughest moving average nuts to crack are exactly where the major indexes are right now. Both the 200 day moving average and the 25X5 are longer-term in nature, which is why they can be a bit tougher to breach. Since the market is often subject to some pretty wild swings, these longer-term moving averages tend to often be looked at as much more critical points when trying to determine what an index or stock in question is going to do in the ensuing weeks ahead. Is this recent relief rally nothing but that, or is it a sign the worst is behind us? I've included a daily chart of the NASDAQ 100 (NDX) here for your review. As you can see, the NDX has retraced 3/8 of its complete selloff that started in September and is now right up against the 25X5 (purple line), as well as very close to its 200 day moving average (green line). Both the DOW and the NASDAQ Composite daily charts look very similar to what you're seeing here, however, the S&P 500 has managed to retrace 50% of its same selloff period suggesting that's where the strength in the market is right now. The bottom line is we're up against very logical resistance levels, so a pullback right around current levels would be no surprise at this point. However, continued strength from current levels would be a bit of a surprise. Two days prior to the markets' short-term bottom a week ago Friday, the volume was abnormally high. That same Friday the 16th, where the markets washed and rinsed traders and reversed course, the volume was also pretty strong. However, every day we've moved higher since, the markets' volume has continued to wane lower and lower. Just look at the volume in this chart of the SPYs here, the ETF which tracks the S&P 500. A classic example of what we've seen with most everything out there with respect to volume. That's not a very strong indication this relief rally has the type of legs to sustain its recent efforts. Additionally, all of the major indexes have gotten away from the 3X3 DMA (blue line), so a pullback to at least the 3X3 would be in order at this point. If and when we can get some backing and filling, what happens on the heels of that is going to tell us much more than the last few days of minor movement. The easiest money has already been made, so we don't suggest running out and getting long any index ETF options at this point unless you want to take a shot at some put options in anticipation of at least a short move lower in the next day or two. We're getting all kinds of banter and useless rhetoric regarding the fiscal cliff coming from the media. As a matter of fact, we're now starting to see even the local and regional news media starting to make a huge deal out of it. Sensationalism at its best. The closer and closer we get to the end of the year, the more you can expect to hear about it all the way down to your holiday cocktail parties. We've been talking about this for months, and now it's really starting to take center stage. Chatter about how it's going to affect the middle class, the desire from large investors to shed stocks and take profits to avoid potentially worse tax ramifications in 2013. It's all starting to surface and most of it we've already mentioned in previous editions. I'm starting to believe that with all of the media hype surrounding the issue, the markets are going to play a game of opposites. In other words, should the markets continue to move higher on news it's all going to get resolved, that's going to be cause for serious concern going forward. However, should investors start to freak as we get closer to year-end, and the indexes make a sharp move lower, I think that will actually end up being the best thing for the markets' longer-term picture. Here's how we're going to play this and why. First, the markets' love to exhaust short-term speculators before resuming its longer-term trend. I would not be surprised in the least if this short-term rally continues toward just above 2700 on the NDX before the real test takes place. On the flip side, a nice healthy pullback around current levels would be no surprise either. Should the indexes move higher toward their 5/8 retracement levels, we'll use that as a backstop and a short entry on the index ETFs, suggesting the purchase of some put options a month or two out. Conversely, if the indexes pull back around current levels and can gravitate back toward the 3X3 DMA and even possibly below that key DMA, we'll use that as a suggested long entry into some index call options. At this point, it's probably better to simply take a wait and see approach before running out and executing any sort of short-term trade. Let the media drive the markets for a few days and let's take a contrarian approach. This whole concept and concern over the fiscal cliff is getting way too much attention for it to actually end up being a major drop of the shoe. That just isn't how the markets work in most cases. Usually when we're going to absolutely implode, it's very unexpected when it comes to the media and very predictable when it comes to chart analysis, so we'll stay under the radar and watch the show in an effort to provide ourselves with a savvy entry we can really profit from. Everyone's expecting fourth quarter numbers not be much of a surprise since expectations have been lowered on many occasions with third quarter announcements. Consumer confidence is getting an awful lot of media attention right now with consumers touting their confidence to its highest point in four and a half years. The media continues to plug a turnaround in housing data suggesting the worst is behind us, so let's just see exactly what it is the markets want to tell us in the days ahead. Sometimes it's just plain better to be out wishing you were in than in wishing you were out.