How was your weekend? We're back for another fun filled week of market activity and analysis. I don't know about you, but the summer continues here in the Southland. It's freaking hot. The markets aren't so hot today though. However, we may very well be in the process of putting in another tradable short-term bottom in the major indexes as I type. I'll get to that in a bit. Advertisement What trades should you set-up for tomorrow? - Free Daily Market Analysis & Commentary This free service will deliver our popular morning and evening analysis reports directly to your inbox. Over 100K traders are using this analysis to prepare and plan for the next trading day, while getting a jump on changing market conditions for stocks, futures, ETFs, commodities and foreign exchange. Start receiving your analysis and commentary now! Advertisement I guess the media decided to blame German Chancellor Angela Merkel for today's weak open across the major indexes. Merkel rejecting her French counterpart's plan to introduce a banking union for the euro area sooner rather than later wasn't received so well. Can you blame her though? You've got to appreciate her conviction for taking a stance that's very unpopular amongst the weaker economies in Europe. There's also ongoing tension between Germany and Spain over the aforementioned bailout request (or lack thereof) and a big drop in German business confidence. This whole international conspiracy of creating one world government doesn't go over so well with me either. That's a conversation and debate for another day though. How much does all of this really have to do with our economy and stocks here at home? The old expression, "be careful what you wish for" seems appropriate here since our Government, along with the rest of the BRIC nations, were so enamored years ago with creating a global economy. Well, there you go. Now that we're a global economy and corporate America now relies on the rest of the world to boost revenue and the bottom line, we're simply going to have to continue to hear about Spain, Germany, China etc... By the way, what ever happened to the blame game and all of the concern surrounding Greece? I guess they've managed to dodge the spotlight for now. Before I get into the technical reasoning why we may be bottoming out in the market right now in the short-term, I read an interesting article that got me thinking this morning (go figure). In short, the article was arguing the strong possibility of a boom in middle class jobs here at home. It really got me thinking about a few issues, which supports the thought of jobs returning home. If you've been around as long I have, you know economies of scale and business in general are very cyclical. Prior to the adoption of globalization, as well as during the process, the manufacturing theme of the day was to outsource internationally because, like it or not, it was much cheaper to have things made abroad. And, let's face it... at the end of the day, it's all about money. Now that major export economies like China have adopted the popularity of capitalism and have been growing at exponential rates, wages and cost of goods have increased abroad compared to say ten years ago. With lack of quality control, government red tape and even higher shipping costs due to energy prices, does it really make sense anymore to outsource product manufacturing, or even services? I don't know about you, but if I get one more foreigner on the phone when I have a customer service issue, I just may lose it. As long as these other countries continue down the road they've paved for themselves, I think it will inevitably bode well for a return to home for the production of goods and services. It may no longer be as cost effective as it used to be to outsource internationally. See what I'm saying? Now that greed has plagued international economies, there's a very good argument the next cycle of changes in our own business landscape here in the U.S. would be to start bringing jobs home. With a high unemployment rate, American's should be much hungrier and willing to do more for less now that there's no longer the facade of easy money and the thought of getting paid well not to do much. Of course it could take months or even years to play out, but I thought it was worth mentioning today since unemployment is such a large topic of debate, especially with the elections around the corner. Back to market analysis. It's no secret we've suggested a contrarian approach to short-term trading now for a while. Buy the dips and selling the rips has continued to work well. You can go back through recent editions (archive here) and read up on why. We've also continued to suggest there's every technical reason why the markets can continue to go higher for at least a while before we reach a logical top. With that being said, prior to the major indexes making big moves over the last few months, there's usually a decent move to the downside. I've included a daily chart here of the NASDAQ Composite for your review. Since the trend is your friend and patterns do often repeat themselves until proven otherwise, let me draw your attention to the green trend line I've drawn in this daily chart of the NASDAQ. You'll notice every time the NASDAQ Composite has gravitated toward that trend line, it has found a significant amount of buying support, which inevitably ended up taking it higher. I don't suspect that's not going to change here. We're almost there now. Keep in mind, it doesn't have to be absolutely perfect when it comes to trend lines, it just has to be in the general vicinity. As we gravitate closer and closer to this trend line, don't be surprised if this market catches short sellers by surprise yet again and resumes its uptrend. Positioning yourself in some ETF call options a few months out or getting long your favorite stocks may prove prudent the closer we get to the trend line. If and when the markets decide to start moving north again, you're probably going to want to experience a good part of that rally.