In yesterday's newsletter we promised to take a look at our open picks and even talk about some potential new ones. True to our word, we'll do so today. We're not going to officially be adding any new names to the portfolio today, however, for a very good reason - the market's showing real signs of fatigue, and odds are good any marketwide pullback is going to drag most stocks down with it. We'll talk about our bigger-picture concerns in a moment when we take our technical look at the broad market. Let's go ahead and take care of the stock-picking business first, starting with the three names we're going to begin watching closely as potential trades. 3 Names We're Eyeing Just to be clear again, none of the three names we're adding to our watchlist today are being added as official picks. They're just tickers we think could soon develop into trade-worthy ideas, and we want to have them at our fingertips if-and-when everything falls into place. If you want to go ahead and add them to your personal stuff though, you probably wouldn't be alone. Just realize you're leaving the proverbial reservation. In no particular order: DuPont Fabros Technology Don't sweat it if you haven't heard of DuPont Fabros Technology (DFT), because a lot of people haven't. It's small, and obscure, and a little unusual to boot. DuPont Fabros Technology is structured like a REIT. And, for all intents and purposes, it is a REIT. It's a REIT unlike any other we've seen though. You know how the term "data centers" has become relatively common over the course of, oh, say the past three years or so? There's a reason for that. The advent of cloud computing and digital everything has made so-called "big data" more like "huge data". We need more capacity to manage it all, and even small companies are tapping into the big data movement. The challenge is, they can't afford to - and don't want to - build their own data centers. As an alternative, they can pay DuPont Fabros to act as a data center for them. DFT comes with a respectable 5.5% dividend, but that's not the reason we're interested. Based on all I've been seeing and reading, DuPont Fabros is close to some serious earnings growth, which will up the dividend, which will spark a rally. I just want to ride the rally, which could be a nice double-digit winner. The trick will be getting the stock out of zig-zag mode. The Laclede Group The Laclede Group (LG) is a natural gas distributor, primarily serving the Missouri market. It doesn't just provide natural gas, but it's the core of the business. Regardless of whatever else it sells, natural gas prices are holding steady and gas continues to be popularly supported, while coal and gasoline continue to get the stink-eye from most directions. This leaves LG in an enviable position as the middleman. It takes no production risk, and it takes on very little pricing risk (Laclede Group mostly marks up its goods based on a percentage of the prevailing rate at the time.) What I'm waiting on here is for LG shares to snap out of a long-developed wedge pattern. BancorpSouth Last but not least, BancorpSouth (BSX) captured my attention this week. As the name suggests, BancorpSouth is a small, regional name serving - no surprise here - much of the banking market in the southeastern part of the United States. It's got just under 300 branches. I know small banks are a dime a dozen. I also know, however, some of the biggest winners over the past couple of years have been small and/or regional banks. Nobody sees 'em coming because they're predictable, and maybe even a little boring. What nobody seems to recognize yet is how small banks are slowly picking away at large banks' business while simultaneously muscling the micro-sized competition out of the market. Case in point: BSX is projected to grow per-share income from 99 cents last year to $1.33 this year to $1.59 next year. There's also a sense of urgency with BancorpSouth - it looks like it's waking up again after five months worth of slumber following the move to $14.00 in January. Now that the 200-day moving average line (green) has had time to catch up with the stock, it looks as if the bulls are testing the waters for another bullish leg. I'm not quite ready to pull the trigger yet, but we're getting close. So why aren't we getting into any of these stocks today? John Monroe over at the Elite Opportunity said it perfectly in today's newsletter: "It's important to remember, even though there are always stocks moving higher in a bad market and vice versa, the tide of the markets as a whole is probably the single biggest factor when it comes to the directional trend of most stocks and since all of the major indexes are starting to display an even larger than average degree of volatility over the last few days, we're not going to be the ones left holding the bag in the event the indexes finally do decide to rollover." It's an easy detail to forget, though it's one we should all ultimately remind ourselves of every day - GET THE MARKET RIGHT FIRST, AND EVERYTHING ELSE BECOMES MUCH EASIER. Right now the market's undertow is obscured, so we're not going to put on a new trade only to have it hit an unforeseen headwind. We're going to wait until we can see the odds clearly working in our favor. That said, if you want to get the market "right" with ridiculous, surgical-like precision, that's what the Elite Opportunity does better than anybody else out there. I'll give you a little more glimpse into that EO insight in a moment, when we get to our near-term market outlook. Portfolio Update Amazingly enough, there was no news from any of our four open positions right now... Hurco (HURC), Astec (ASTE), Cloud Peak (CLD), and ANI Pharmaceuticals (ANIP). In fact, the only one of the four with any news even about it today was Cloud Peak, and that was more about the EPA and the potential impact of its recently-proposed plan to cut carbon emissions. We still feel fears of new EPA mandates are overblown, and we still see coal as a good long-term opportunity. But, that's neither here or there. The lack of news doesn't mean there's nothing to talk about with any of our positions, however. We mentioned yesterday there was something we wanted to show with Hurco. Let's get that out of the way first. It's real simple - while HURC shares are in an uptrend already, a ceiling seems to have developed right around the $28.00 level. We expect Hurco shares to punch through it, and when they do it should unleash a lot of the pent-up bullishness that's been building for months. This is largely why we wanted to go ahead and get into a trade now... the undertow is already bullish, and it's only a matter of time before a breakout unfurls. Once it gets here though, odds are good HURC will launch pretty quickly. We don't want to have to chase it. Let's also take a quick look at a chart of ANI Pharmaceuticals, but not because there's anything we need to do about it. It's just good to see the rally effort is still going strong. The bears put some pressure on the stock early yesterday, but all it took was a brush of the 20-day and 50-day moving average lines with the low to spark another round of buying. ANIP was up nearly 3% on Tuesday, and we're up about 8% on the trade. Kind of like Hurco needs to clear the $28.00 level to really get going, ANI Pharmaceuticals needs to clear $34.60 first to really get the fireworks started. We'll be patient with both. This is where we stand right now. Need more picks? You know, we'd love to be able to give them to you. With the crazy publishing schedule we have most of the time, though it's just tough to get everything in and make time/room for new ideas. If you want more (and frankly better) stock trades, the guys over at the Elite Opportunity service dedicate 100% of their time to analyzing the market and finding hidden trading opportunities. I think we mentioned to you late last week how the EO had exited 36 trades this year, locking down an average of 6.9% each. That's amazing, as in better-than-hedge-fund amazing. While we strive for big gains with the picks we post here in the free end-of-day newsletter, it's doubtful we'd ever be able to put up those kinds of results at the pace the Elite Opportunity seems to be able to with ease. It's kind of sickening, but mostly it's compelling. If you want to see it for yourself for free, the two-week test-drive offer is still available. Here's how to get it , or cut and paste this link: https://www.smallcapnetwork.com/?vmpd_ckstr[click_track]=Newsletter&vmpd_ckstr_redirect=/pages/SCNEO/v1/ This Pause Isn't For Effect If you wanted to, you could make a bullish case for stocks here. It just wouldn't be a very good one. That bullish case would mostly be an argument that not losing ground for the past couple of days is a sign of the bears not being willing or able to knock stocks over. And, honestly, there may be a smidgen of truth to that premise. Taking a good, honest look at the situation though, we can attribute most of this pause as a hint of worry about (1) the frothy valuations we talked about last week, and (2) the degree to which stocks are overbought right now. There's simply not a lot of room for the market to tack on more upside here. It's just going to take at least a couple of days for traders to digest this reality. The pause this week is a hint they're starting to recognize the pullback risk. The continuing deterioration of volume is another clue that fewer and fewer traders are interested in being buyers at these lofty levels. Take a look at the S&P 500 to see what we mean. The Elite Opportunity newsletter clearly has its finger on the market's pulse right now, as we can tell with this snippet from today's newsletter: "So what's all of the short-term concern right now? Again, it's the NASDAQ but the S&P 500 also revealed what could be an early reversal signal this morning, which could end up being the trigger for the indexes to start moving lower. I've included an hourly bar chart of the S&P 500 here dating back to the beginning of its recent run that started back on May 21st. As you can see, the index had been thrusting higher, continuing to trade above the 3X3 DMA (blue line) for days. Sure, it found its way below it on a number of occasions but it wasn't until the last few days whereby the hourly swings to both sides of the trade started to get longer in the tooth, which I've circled here.... ...Considering everything we've said in recent weeks and tying it to what we've seen over the last couple of days, I just don't like the risk/reward associated with being aggressively short-term bullish on these markets right now, regardless of what anyone else thinks. We're just not going to turn a blind eye to what's going on and simply trust the idea of these markets breaking new solid ground to the upside right now." That's not all Monroe and his team said; the really good (and actionable) stuff is reserved for SCN EO members. You get the idea though. It just looks like stocks are having a tougher and tougher time here. Even good news doesn't seem to be spurring any real buying. Maybe it's got more to do with the calendar than the market. Even then though, the reason for weakness doesn't really matter. It's going to hurt no matter what causes it.. Our suspicion is, one close under the prior day's low could and likely will start a selling avalanche, and odds are good we could see it happen sometime this week. That much we're pretty sure about. What's not clear on yet is how or where that selloff will stop. We'll cross that bridge when we get to it. By the way, later this week we'll be taking a more detailed look why we're still fundamentally attracted to coal. Stay tuned.