Hope you had a great weekend. I thought today's subject line was very appropriate since that's exactly what the market is doing this morning. As I type, the NDX is testing the 2588 low it tested twice last week. Will three times be a charm? We're going to find out very soon. We mentioned last week the possibility of the NDX blowing through the 2588 support level before staging a fairly strong reversal, so even if the NDX takes out that support, I wouldn't necessarily be running for the hills. It could be just enough to freak everyone out into thinking there's no hope. Once investors lose hope, that's when things will turn. Advertisement Complimentary Stock Analysis Should you buy, sell or hold? Enter any stock symbol for a free, complete technical analysis from INO.com. This report will be delivered to you instantly! --- Today's Top 50 Trending Stocks This dynamically updated list will share today's top trending market movers to help you find realtime trading opportunities. Advertisement Today, the media is blaming Greece for the weakness but reality is this market is going to find out just how much conviction the bulls have to take this market higher. What we find interesting right now is the S&P and the DOW both are much weaker than their tech brethren NDX. This is pretty important since tech has been the leader of strength for quite some time. Both the DOW and the S&P have blown through their mid-April support levels, which quite honestly I don’t find overly concerning. It appears the markets are working their way toward establishing enough fear in this market to potentially take it higher over the summer months. We're going to stay pat with our range of 2590 - 2550 on the NDX as the level where the markets will likely find solid footing for a nice tradable rally. There's always the chance of a major shoe dropping somewhere in the world but for right now, the markets are making perfect sense and nothing has come as a surprise... yet. Let me be clear here, we're in a short-term bearish trend so don't get careless thinking you're just going to buy the dips in hopes of closing them out on a move higher. The real trade right now would be the opposite, fade the rallies with put option purchases and cover up when the market moves lower. However, the risk/reward right now doesn't seem to offer much in the reward category for either play. Sometimes, you're just plain better off with a "wait and see" approach. We already provided you with a profitable options play last week that yielded anywhere from 30% - 40% profits and we're going to keep a close enough eye on what's going on to hopefully do it again very soon. For now, hang tight. A Little Fundamental Analysis Goes a Long Way Knowing what you're dealing with when making any decision with your money is always prudent. Whether we're talking about a NASDAQ listed small cap or an extremely speculative development stage penny stock, it's important to have at least a pretty good idea of what's going on fundamentally with the stock to determine just how much patience one is willing to exercise. There's money to be made in every stock, but the first and foremost aspect of being successful with small stocks is understanding enough about the company to be able to determine just how you're going to play it. At the very least, a quick review of the company's financial filings with the SEC will likely give you enough of a backdrop to give you an edge over other small stock investors. Since most investors tend to rely on rumor and opinions from Wall Street analysts, various publications or even their friends, having a look at the company's consolidated statement of operations and their balance sheet may prove time well spent. OK, that's fine but what do I look for? It's probably safe to assume most investors don't have the time or the interest to peel apart financials with a fine tooth comb, so we'll provide some important key points to look for here in an effort to identify just what you're dealing with when looking at trading or investing in any small stock. First and foremost, cash on hand and/or cash flows to me is the holy grail. Whether it's a speculative non-revenue generating biotech or a growing top line tech play, if the Company doesn't have sufficient cash, there's a high likelihood that it's going to have an awfully tough time realizing the growth necessary to sustain an increase in stock price. If the Company is well capitalized, you can feel much more comfortable about its current and future prospects as a public company. If the company in reference has little to no cash, I'd tread lightly until they get the necessary financing to make it to the next level. Don't get me wrong, it's totally possible to successfully trade a small stock till the cows come home that has no cash on hand but if you're going to invest, that's a whole different story. That brings me to the next critical component and probably the most difficult, the company's financing terms. No company gets cash for nothing. That's obvious. So, what did the company give up for the cash they have? Was it a straight equity financing at a slight discount to the market with no warrants or was it a toxic financing with convertible warrants and no floor? If you dig deep enough into a company's most recent 10K or 10Q, you should be able to find the terms of their financings and that can tell you a lot. The terms of a company's financing often tells us how difficult it's going to be over the course of months for the company's stock to make any headway. While you're at it, have a look at the amount of debt on their balance sheet. Is it reasonable or has the company just managed to burn through other people's money over and over again without any significant growth at the corporate development level? When it comes to investing, I personally love companies with plenty of cash and very little to no debt. Easier said than done though when trying to find those! Lastly, is the company growing their top line revenue? In the case of biotechs, you can view their clinical trial progress in lieu of top line revenue but for any other company, I suggest if you're looking to invest for the long haul, that you start to see signs of top line revenue growth. Earnings isn't always the most important factor with small stocks because they're often not mature enough yet to realize nice bottom lines, but it sure doesn't hurt if you can identify a growing bottom line in a small stock. Advertisement Santa Monica Wiz Kid Makes $87 Million Trading Stocks Using his same strategy you can get crazy rich - fast! One trader recently used this strategy to increase his wealth 4-fold in a single weekend. Find out how you can do the same thing! Click Here and Find Out How - for FREE! Advertisement I call those the "Big Three" when trying to determine if you want to invest or simply trade an idea... cash on hand or cash flows, financing terms and top line growth. Stocks that don't fare well with what I've mentioned above usually shouldn't deserve parking your money there for the long haul and letting it work. Those stocks should be traded with a short leash and exercised with a bit of caution. However, when you come across a stock that's starting to meet all of the criteria above, watch out, you may have a long-term investing monster on your hands. If the stock in reference only meets some of that criteria and falls short in other areas, it's not the end of the world, but it is worth at least keeping a fairly close eye on things. The market loves to trade on speculation and there's plenty of money to be made speculating on stocks. And, it's important to understand most stocks trade based on what's going to happen more so than what has happened, but if you're going to put your money to work in a company for the long haul, you'd better at least have some signs that the company is moving in the right direction... no matter what anyone is telling you. Hope that at least gives you a little savvy guidance. Let's see how the rest of the day unfolds, I suspect this week is going to be very interesting.