Now the media says the recent selloff is all about earnings. Isn't that what we've been saying ever since the end of the second quarter? I read an article this morning suggesting that corporations are now going to have to cut jobs and create more efficiencies in order to combat lower revenues and earnings. Sorry, that's simply not the case. That's exactly what they've been doing for the last few years now, which is exactly how they've managed to beat estimates and provide investors with improved bottom lines up till now. If you read between the lines of what's been going on with third quarter numbers over the last few weeks, corporate America has run out of tricks, and I mean that with all due respect. What companies have managed to accomplish in previous quarters is a testament to good solid management at the highest levels. What's taking place now is although corporate America has done their job, the work now is up to the consumer. I doubt we're going to see a tremendous amount of job cuts because we're about as lean and mean as we can get here at home already. There's likely nothing more to cut or they're going to start cutting in a way that further lowers the probability of even just meeting guidance going forward, let alone beating estimates. Interestingly enough, large corporations are still very flush with cash and borrowing is on the cheap, so it's highly possible we're on or near the verge of companies getting aggressive in a whole new cycle of growth. For example, it's a very common and savvy strategy to start advertising aggressively when things are at the maximum point of pessimism. So, even though Google missed and freaked the investing world out last week, there's a big probability next quarter will likely be very good. When there's nothing left to cut, you've simply got to come out swinging, and I suspect that's what large cap corporations are going to do in the coming quarters ahead. It's time to strategically use some of that cash they've been conservatively sitting on for the last couple of years, and get creative with it. That should spark growth from the top down. My point here is to not necessarily let the media suck you in to things that they're basically late to the party with. As a matter of fact, when it's all said and done, what's going on with the markets right now could very well be the trough that is the last big shoe to drop before things finally do decide to get better. If you're concerned about the fiscal cliff, I wouldn't be for a while. Remember, at the maximum point of pessimism is when you probably want to be buying. Now don't get me wrong, I'm not suggesting we run out and start snapping up all of our favorite ideas, however, what I am suggesting is when everyone starts to realize and get concerned about what we've been saying all along with regard to fundamentals, it's often the beginning of the end of that particular cycle. With that being said, it's still going to take a bit for this market to digest all of the negative sentiment that is surrounding third quarter numbers right now. The major indexes moved lower this morning after providing short-term players with a little relief yesterday. Pretty much what we expected. The trend is you friend and right now, the trend is pretty ugly, so it's best not to get in the way of this sharp move lower. Since the NASDAQ Composite didn't want to hold its 3/8 retracement level of its complete move up from the June low last week, it was a signal further downside was in the cards. We published an edition last week on volume, and that edition is going to be a perfect opportunity to put to use in the days or even weeks ahead. There's a few key clues we're going to be looking for to determine where this market is going to find a bottom. I'm not referring to a relief rally, I'm referring to a real bottom we can rely on for a while. The bad news is so much technical damage is being done right now that until we get back to the September highs, any rally is going to be suspect. Sure, we can most definitely make money trading these short-term pops that show up, however, if you think you're going to jump in right now and get long, you just may end up getting your butt handed to you. I've included a few charts here for your review. The first is a daily chart of the S&P 500. See the August support level I've circled here? I suspect we'll need to take out that level before we can assume a risk/reward tradable opportunity that exists to the upside. That's contrary to what many think. Many traders often think support levels are buying opportunities when in fact the best buying opportunity exists on broken support and capitulation. This is where volume comes into play. There's a few key things to look for with respect to volume in the days or weeks ahead. If and when we see the index ETF's blow off hard to the downside on huge volume, or conversely on virtually no volume at all, that's a clue maybe the markets are ready to turn. Anything in-between would just be status quo suggesting no real change. Why? When you have a sharp move lower on no volume, that often suggests a head fake shake with not much blood left on the street. When the ETF's blow off hard on big volume, that's the contrarian play suggesting traders are on the wrong side of what's coming. Both can be excellent signals that things are on the verge of turning. Another strong signal would be a nice big wash and rinse, whereby the index ETF's move sharply lower and snap back in furious fashion all within the time period in question. It could be a daily bar chart or a weekly bar chart. You'll know when it happens because we'll point it out. The second chart I've included here is a daily chart of the QQQ's, which is the index ETF for the NASDAQ 100. If you believe in gaps being filled (which we're not believers every gap must be filled), you'll see here the QQQ's still have some gaps to fill with the biggest gap being in late July. That would suggest much further downside is in the cards. However, the 5/8 retracement of the whole move from the June low to the September high sits at roughly $64.08, which is slightly above that biggest gap I've pointed out here. It would not surprise me one bit if the QQQ's gravitate toward that level sucking traders into thinking that gap's going to get filled, when in fact it finds support around the $64 level and roars to the upside from there. It's important to understand if you're going to try and catch a falling knife right now, you MUST have some serious context for your trade. Don't just run out there and pick up some call options because you "feel" like the market is due for a bounce. Just like stocks can go up beyond levels you could ever imagine, they can also go down so far and so fast, that you're left scratching your head in disbelief. Whatever you do, keep it rational. Don't let emotions get the best of you. The smartest money is buying when things are at their gloomiest and worst, and are often selling when investors are jubilating over what "has" happened. There is most definitely going to be some serious bargain hunting, just not quite yet. Lastly, if you're concerned about open positions you have in specific individual stocks, just look at the rest of the market. You're not alone. I've been getting a lot of inquiries from individual investors asking me if I like this stock or that stock lately. To be honest, I feel like Mikey. Remember the Life Cereal commercial from years and years ago? Hey! Mikey likes it and Mikey doesn't like anything! Well, I feel like Mikey right now. It's just how it is for the time being. Not even Apple is a shining star right now. When tech settles down, that's also going to be a big clue things are on the verge of turning, so stay tuned. This day too shall pass.