Welcome back from the weekend, one and all. We hope you had a good one. While today may not have been a rip-roaring bullish start to the new trading week, it was a tolerable re-entry. We're still within easy reach of a breakout move, and the market's mood is still one that broadly suggests investors are seeing the glass as half-full rather than half-empty. As unmerited as that optimism may be, rule #1 of investing is, don't fight the tape. SmallCap Network's Premium Advice - Elite Opportunity Actionable short and long-term NASDAQ and NYSE stocks poised for index average beating returns. Experienced daily in-depth analysis of major indices and their ETF's for short-term trading profits. Earnings options plays. Pinpoint analysis for trading precious metals and oil. Currency, bonds and much more! Get in the know now by getting on-the-ground trading and investing advice to make you more money. 30-Day Money Back Guarantee. Click Here and Sign-Up Today! We'll slice and dice Monday's market action below, as we always do. The first thing I want to get out of the way in this edition of the SCN newsletter is pointing you to some of the website's top commentaries posted today and over the weekend. It's always good stuff, but today's batch was unusually good. From the Site I wasn't kidding about how today's posts at smallcapnetwork.com were especially interesting, and useful. I'd like to highlight all of them. In the interest of time and space though, I'm going to limit myself to just three; you'll have to find the others on your own once you're there. In no particular order: It's sure to stir up a hornet's test, but maybe that will be a good thing. I'm talking about Netflix (NFLX).... one of the market's most polarizing stocks right now. Either people think it will eventually grow into its valuation, or it's spending more money than it will ever have. There's not much in between. Bryan Murphy advances the debate today with "A Chart (& Table) That Will Make You Reevaluate Your Netflix Position." He wasn't kidding. We know a bunch of you have been following the saga of the 3D printing industry and its stocks, so Peter Graham's "Small Cap Voxeljet AG (VJET) Earnings Report: At Bottom?" is for you. In his look, Graham previews Tuesday afternoon's earnings expectations for VJET. Its competitors have posted lackluster Q1 results and equally lackluster forecasts. Any chance Voxeljet could be different? Last but not least, I thought James Brumley put together some pretty interesting research about summertime sectors in his "These Sector ETFs Are, Historically, a Cure for the Summertime Blues" from Friday. He wisely acknowledges the calendar alone is a lousy way of picking trades. On the other hand, averages do point out the tendencies. We've mentioned it before, but we can't say it enough - you can publish your opinions, articles, and insights at the website. If they're compelling enough for all our readers, we'll even mention them here in the newsletter. Start building your army of followers today! It's easy to do. Just go to the website, click the "Publish" button, and begin writing. The Tank is Still Empty One of the toughest parts about being an editor of a newsletter like this one is walking the fine line between being informative but not overwhelming.... teaching, without preaching. Most of the time we probably err on the side of not being detailed enough, in the interest of keeping things simple and breezy. Today though, we'll going to go ahead and warn you now we're going to go all the way to the other end of the spectrum. Don't worry though - it's still going to be short and sweet, even if there's an important but obscure lesson packed in there. Remember the Arms Index, or TRIN indicator? We actually talked about it back on February 19th, suggesting the Arms Index or TRIN - short for TRading Index - was too low for the market to rally any further. In fact, if anything, it was due for a pullback [a call that was spot-on, by the way]. Since it's one of those obscure and slightly complicated tools though, we want to give you the Q&D version of that lesson again so you'll fully understand why we think the broad market's undertow is leaning bearishly as we make our way into summer. In simplest terms, the Arms Index is a comparison of the overall market's (or an individual exchange's) up and down volume relative to its advancers and decliners. In other words, It's a ratio made up of two other ratios. I'm not going to get into the formula or mechanics here - I just don't have time. If you really want to know, I'll just point you here, to the inventor's explanation . For our purposes, it'll suffice to say we use the Arms Index or the TRIN to spot imbalances between the market's breadth (advancers/decliners) and depth (up/down volume). When the balance gets too far out of whack, market reversals become very likely. Though it's not a perfect tool, it's a good one we've demonstrated as successful more often than not before. Case in point? The last time we looked at the TRIN indicator for the NYSE, pointing out how the TRIN reading at the time was simply too low for the market's own good, and there was no room left for stocks to keep climbing. Care to guess what happened? Yep, the S&P 500 hit a peak just a few days later, and hasn't made a higher high since then. Just for help, we've marked all the points where the 10-day moving average line (red) of the TRIN reading reached an extreme low. Most of the time, it did coincide with at least a minor market top. [Ignore the gray lines. That's just the daily Arms Index data, which is too volatile to analyze day by day.] On that particular chart we used a 10-day moving average line to capture the market's likely near-term ebbs and flows. The 20-day moving average line of the TRIN reading is also very useful as an intermediate-term indicator though, so we've added that line (in blue) to our chart below. Like above, we've tagged all the "too low" situations for the 20-day moving average of the TRIN reading, and marked those same points in time on the chart of the S&P 500. Again, it's not perfect, but it's eerily good at figuring out where rallies - and pullbacks - start to run out of gas. As for what the TRIN readings were telling us about the state of the market at the time when the TRIN moving averages were ultra-low, the simplest way of describing it is, the rally lacked the participation it needed to remain in motion. Great, but what's this got to do with today? Take a closer look at both moving average lines of the Arms Index right now. They're both at or near extreme lows, suggesting there's just no real room to rally. I know it's an obscure idea, and one that can look and feel a little complicated. Well, I've got news for you... the market is messy. It takes complicated, overarching ideas like this one to clean it up into something you can actually interpret. As is always the case, this isn't an iron-clad guarantee the market is going to tank. It's just an odds-making too. I really like the TRIN index though, as it shows us an aspect of the market that's not easy to discern in any other way. Besides, it's got a pretty good track record for people who know chasing momentum doesn't always work. With that as the backdrop, while today's action wasn't disastrous for the bulls, it was once again suspicious... and makes a lot of sense given the situation we currently have with the Arms Index. That is, stocks just seem completely unable to get over the same hurdle that materialized back in February the first time the Arms Index became a glaring problem. The hurdle in question is (still) the 2118 area for the S&P 500, which is where the index peaked in late February. It's also worth pointing out, however, the VIX continues to find a floor at 12.70, which is also helping to keep a lid on things. Don't get the wrong idea. There's still a huge swath of support around 2080 for the S&P 500, and until that floor is good and broken there's no real assurance the market is going to dish out a decent pullback. That's the drawback of the Arms Index.... it shows you what should happen, but it doesn't tell you with any real precision when it will start to happen, nor does it guarantee it will happen at all. That's why we look at multiple market indicators rather than think one-dimensionally. A bearish TRIN reading will underscore the concern when and if the floor at 2080 breaks. In the meantime, this is still a waiting game. We just wanted to give you this bigger-picture perspective today, since we may not get a chance to later on this week.