I'm generally not a fan of personifying the market, simply because it makes it too easy move accountability from the trader (that's us) to something else. Sometimes though, the market really does take on a life of its own and behaves erratically, yet with a twisted agenda. This is one of those times. Now, I said that so I could say this.....last week's 4.8% selloff after what was glimmer of bullish hope is the market's way of yankin' your chain. That's not bullish or bearish (yet). It's just some perspective. Tensions are sky high right now, with some bears desperately trying to talk stocks lower, while a few contrarians are buying everything they can while simultaneously trying to talk stocks higher. Most players, however, are on the fence and happy to stay there until further notice. So, don't be fooled - all this volatility in either direction is just a show that lacks substance. See, I've seen this too many times before. YOU'VE seen this a few times as well, I'm sure, with last year's post-Flash-Crash fallout being a recent example. The end result is ultimately going to be a stalemate, but the mess in the meantime is going to look stunningly bullish one day, and frighteningly bearish the next. In the end though, neither side is going to win. We just have to wait for both sides to quit trying. When might that be? At this point, I think these whipsaws have pretty much pushed most people away through the end of September.... the end of Q3. There's no economic catalyst in the meantime that could break us out of the rut, and the only thing that's really going to 'prove' anything to anybody from here will be third quarter's earnings results. Of course, they don't start coming out until October, so we're on hold until then. That actually works out good however, especially if Q3 ends up being just reasonably profitable. The less we rally now, the more we rally then. And yes, I'm still a bull until I have a reason to actually think earnings are shrinking. I have to trade based on what my eyes and the numbers tell me, and what I know right now is that the S&P 500 is trading at a trailing P/E of 12.36, which is as cheap as the collective market has been since 1991 (and earnings are still in an uptrend). Now with all that being said, none of my long-term optimism changes the short-tem reality, nor does it alter the game plan we laid out a couple of weeks ago. Remember, we still expect two or three more bearish 'ebbs' and bullish 'flows' to play out over the next few weeks, just to shake off any remaining bulls and bears. We're specifically recommending stepping into long-term trades on those dips. If you're looking for a short-term trade, there's plenty of opportunity for you as well. You just need to be willing to buy when things look awful, and willing to sell when things are starting to look bullish again. Case in point -> the last two weeks. Anyway, we can look at the market in more detail when we've got the time. For right now, we've got some trade updates to work through. Lone Star Gold First and foremost, how freakin' hot has Lone Star Gold (LSTG) been? We knew it was a compelling junior gold miner back when we introduced it on August 15th and it opened at $0.92, but to survive another market slaughter and manage to close at $1.05 on Friday (five days later)? We'll gladly take a 14% gain over the course of a week in this environment. Anyway, a housekeeping item with LSTG... The next big milestone level for Lone Star Gold shares is $1.08, where it's topped over the past three trading days. The bulls have continued to come back for more all week, as evidenced by the closes at the upper end of the daily trading ranges. There's something about $1.08 though, and I've got a sneaking suspicion anything above that mark could set off another round of buying. As such, this is one of those rare cases where a buy-stop order may make a little sense. That's just an order that is executed only if-and-when the stock reaches a certain level. In this case, that would be the $1.09 mark. I still think a buy-stop is the wrong kind of order for most folks, but for you veterans and constant trade-watchers, it may be a way to play it. Bering Exploration Speaking of stocks that are rallying in the face of the headwind, have you seen Bering Exploration (BERX) this past week? A rocket, pure and simple. It's more than doubled from the low hit in early August, and it's gathering volume/buyers on the way up now (which is the key to any rally's longevity). This one may have been a slow starter from when we first mentioned back on July 20th, but in retrospect it's pretty clear that dip in early August had nothing to do with the company and everything to do with oil prices. Now that the dust is settling, buyers are wandering back in. Of course, they may be wandering back in because they finally heard the news they've been waiting on.... Bering has struck oil! Remember how we said two newsletters ago that Bering had drilled as deep as it needed to at the Chicas Locas #1 well in the Roxanne field, and then remember how in the most recent newsletter we said that Bering was starting to perforate at that depth, and if there was any oil, they'd find it at by perforating at that depth? Yeah, well, it worked. That well is now producing. No word yet on how much it's producing, but this is the field that's estimated to have over $8 million in potential gross reserves. As exciting as that is for investors, I'll add this side thought... the benefit of finding oil at Chicas Locas #1 pales in comparison to the instant credibility Bering Exploration just gained. This company isn't throwing darts any longer- it's demonstrated it knows what it's doing as a driller. Frankly I'm surprised the stock isn't racing faster, though we may see that today now that the news has had a weekend to spread. If you aren't in BERX yet, I think now - in light of the news and new-found credibility - is the time. Lihua International Finally, this stock-bashing effort from the folks who are short Lihua International (LIWA) has just gone from ridiculous to pathetic. You may recall this stock took a hit back on August 1st after a pretty scathing assessment from Absaroka Capital Management LLC. Of course, the stock started to rebound the next day, and it was only a few days later the China 360 report came out and pretty much verified the company's stated numbers were accurate, and all the allegations from Absaroka were crap. This time Kerrisdale Capital Management is on the bashing bandwagon, suggesting that the China 360 report is invalid not because China 360 has a vested interest in LIWA (which it doesn't), but because "China 360 Solutions, given its relationship with Global Hunter and its three backers' histories generating revenue from Chinese RTOs, should not be viewed as a disinterested third party with respect to its report on Lihua International, a Chinese RTO." That's right - since Lihua is a Chinese RTO and Global Hunter and China 360 deal with RTOs, then it's biased even though LIWA wasn't one of the RTOs either party handled. I guess the thinking is that it could affect future business. Quite a stretch, eh? A lack of businesses opportunity for Global Hunter and China 360 is the least of their worries. Wait - it gets more stupid. While the Kerrisdale opinion questions the report published by China 360 simply based on the kind of business it's in, that very same Kerrisdale report acknowledges that Kerrisdale has a short position on Lihua International. Are you freakin' kidding me? You're telling me a third-party with no vested interest in LIWA at all is more biased than an outfit that specifically has a short trade on Lihua, and will benefit if its price goes down? Welcome to the dance. I suspect we'll see the same action from LIWA that we did the last time - the bash piece will be reviewed by all, and then ignored by most, with the stock resuming its uptrend. As Bryan said in a recent post, this "all small cap China stocks are a fraud" thing has more than run its course. If anything, all this bashing is a contrarian buy signal. Talk to you in a couple of days.