Markets ran into some weakness yesterday at the close and is off modestly this morning as I type. All pretty logical since the NASDAQ Composite ran up into that key resistance level around 3049 we've been anticipating for quite some time, and finally confirmed Tuesday. As it stands right now, the indexes could use a little backing and filling to support the argument of going higher on any positive news surrounding the fiscal cliff issue. Although we do believe the media is making far more out of the issue than the markets actually care about, it would still, at the very least, provide a short-term catalyst for the markets to move higher. I say that because I think it's pretty safe to assume something is going to get done regarding the highly touted fiscal cliff, if not by the end of the year, more than likely shortly after the New Year. The key isn't whether or not the indexes sell off of a bit, but rather where they end up finding their footing. We pointed to the fact yesterday if the Comp. could take out Wednesday's high with any sort of conviction, we could see 3100 in fairly short order, however, that remains to be seen. I've included a daily chart here of the NASDAQ for your review. As you can see, the index has stalled now that we've managed to achieve the 5/8 retracement level I'm pointing to here in this chart. Additionally, the two day move lower so far comes as no surprise, since we made it pretty clear the markets love to gravitate toward confluence areas, and take them out before reversing course, which is exactly what the NASDAQ did earlier in the week. I've pointed to that confluence area here as well so you can see exactly what I'm referring to. We've also pointed out the S&P and the DOW both have managed to get back above the 3X3 within two days (at the most) every single time they've pulled back ever since the markets bottomed in mid-November. Should this trend change, we could be in for further downward pressure, and then we'll have to assess where the indexes may pose the best buying opportunity on the heels of some selling pressure. If you've been following along, you know we've also made it pretty clear the S&P 500 index has led the charge of the recent rally, which is the first time in a long time the conservative index has been the leader. The DOW still continues to follow the S&P basically tracking it to perfection lately. However, I think it's important to note since the indexes topped out yesterday, the S&P and the DOW both have given back more than the NASDAQ Composite. So, is this an early sign the markets are moving lower, or is it an indication money is flowing back into more speculative names? If money starts flowing back into the NASDAQ and we start to see some strength across the indexes, the NASDAQ may want to regain its leadership and move the markets higher across the board. I will say looking at today's daily charts, the S&P and the DOW both are looking a bit toppy. How'z that for a real technical word, "toppy"? I've also included a daily chart here of the S&P showing you what I'm referring to with respect to the 3X3 trend (blue line), as well as circling the very short-term developing top. It's important to try not to be assume a technical reversal until there's some sort of reasonable context for the assumption. With that being said, the S&P could continue even lower than it is now, but the technical bullish trend of late could still be intact. Why? Because if the S&P can move lower but still maintain its positioning above the 3X3, the index could very easily reverse course back to the upside and resume its trend. Conversely, if it breaks below that all-important moving average, and can't get back above it within three trading days, that could suggest further downside. Since waiting for either scenario to happen would leave profits on the table, there's something more leading we've identified that you may want to keep a close eye on in the days ahead. The biggest short-term clue we're looking for in order to confirm a move higher or an early sign of a trend reversal is actually within the hourly bar chart of the S&P here. Every single time the S&P has moved higher since the November low, every short-term pullback on the hourly chart has either been a 3/8 or 5/8 retracement before it found its footing for another strong leg up. As it stands right now, you can see we're sitting on a 3/8 retracement of the most recent leg up. Even if the S&P moved lower toward the 5/8 retracement level, which sits at 1425, the index could use that level for another nice leg up. If we crack 1425 convincingly to the downside, that may suggest a short-term bearish trend is in the works. If we can hold either the 3/8 or 5/8 retracements from the recent run, and take out Tuesday's high, we're likely moving higher. I can almost assure you. We suggested shedding any short-term long positions earlier in the week, lock in the profits, and see what this market wants to do from here. So far, that strategy has proved prudent. With options expiring tomorrow and a reset of the new options period initiating Monday, I suspect we'll continue to get a little volatility between now and then. Let's be patient as we approach the end of the year. The beauty of the markets is there's always opportunities to make money, you just have to pick your spots and individual ideas carefully.