There you go. The indexes are moving sharply higher today on news unemployment is trending slightly lower. With a drop in new claims and payrolls processor, Automatic Data Processing (ADP), reporting private employers added 158,000 workers last month, that makes for the biggest increase of new jobs since February. Yes, that's good news and we'll take it, but that's not why we think the markets are moving today. That's just what the media is saying. We said on Tuesday and reiterated yesterday the markets were finally at levels that should support a nice tradable relief rally at the very least. We suggested 1395 on the S&P 500 as the perfect entry, and only missed pegging the absolute bottom by a mere six points. Not bad, and no, we're not perfect. Basically, the markets have moved so much so fast to the downside for little over a month now, that a relief rally was definitely in the cards any day. And as we said yesterday, we were starting to see sell side pressure subside, as there are plenty of funds out there wanting to take their shots who are now looking to participate in a potential year-end rally. There was also a lot of stocks sold off to the down side on better than summer volume over the last 30 trading days, which needed some relief by market makers. Couple that with logical support levels across all of the major indexes, and you have a pretty nice snapback in the cards. That's what you're seeing today. Can it last at least more than a day, a week, or a month? We're going to find out. Whether you got long some index call options or picked up some ideas participating in the rally today, congrats, you have a nice cost basis in place and should be well in the money today. However, there will be a point where the markets are going to be tested for their conviction, and let's remember it's about earnings not about jobs. And, when you're toying with options, unless you're buying options well out into the future, it's very prudent to take your profits early and often. The worst thing you can do in this market environment is be up 30% overnight, only to be down 30% the morning after. If this market is going to truly put in a long-term bottom, you're going to see a fair amount of volatility along with the bottoming process. Therefore, there's plenty of opportunities to make some money in this environment. Now that the indexes have acted according to our analysis, it's time to turn our attention to where this market may run into some issues once again, because we have a few interesting things shaping up with the indexes. First, you've heard me say enough times the NASDAQ has led the surge ever since the bottom of '09, but now we have had the NASDAQ leading the move lower with this recent selloff. The DOW and the S&P 500 have only given up roughly 3/8 of their summer rally, with the NASDAQ giving up as much as almost 5/8. Much of it has to do with the recent toppling of Apple and Google, as well as other large tech bellwethers, but the argument here is they ran up too much too fast and deserve a bigger haircut. However, I'm still concerned over the S&P 500 being up double digits from the same quarter a year ago, but earnings for their third quarter are lower than the same period a year ago. See the divergence? What the indexes are telling us right now is either the last month is an early sign of earnings going in the wrong direction and it's time to start buckling up, or the markets are setting themselves up for a huge surprise to the upside in 2013. Will the elections have anything to do with it? Although most would say yes, I'm actually thinking no. A repair of the fiscal cliff and a massive return of confidence from the consumer would likely be a much bigger catalyst than anything else I can think of at this point. Remember, perception is everything. Technically, I've included a few charts for your review. The first is a weekly chart of the NASDAQ 100 (^NDX). As I type, the ^NDX currently sits at 2687. See the 3X3 DMA (blue line) I've included here? Although that DMA (displaced moving average) number is dynamic and moves with more trading, the number right now sits at 2777. That's a little shy of a 100 points from where we are now, but it's highly possible that's where this new found rally may want to gravitate toward before we really have to decide if this rally is for real, or if it's just a bounce in a lower trending market. Regardless, that's a very nice tradable range for bulls to make money right now. I've also included a couple of green trend lines that have been drawn across the major bottoms of this rally over the last few years. Long-term still points higher on our monthly charts, so we don't believe a doom and gloom outlook for the next couple of years is really in the cards. As a matter of fact, when we take a look at the long-term technical prospects, I wouldn't be surprised to see the markets rally nicely over the next couple of years. Finding the bottom right now seems to be more difficult than determining whether or not stocks will be higher over the next couple of years. The second chart I've included is a daily chart of the S&P 500. I've drawn a trend line through the recent tops of the S&P, so you can see relief rallies are nothing but that, relief rallies. We'd need to see a convincing break above that trend line before we'd start to get even the slightest bit excited. However, let's just get to that trend line first, because right now, even that would be major accomplishment. Don't get me wrong, today's a good start, however, it's still very suspect based on the recent trend, and yes, the trend is your friend. The bottom line here is we can likely expect a fair amount of volatility in the weeks ahead. I seriously doubt if this market has truly found a bottom, that the indexes are just going to continue to go up without a decent shake. The more volatility we see, the more we can trust what's going on right now. Additionally, should the indexes take out yesterday's low over the next three or four days, it doesn't necessarily mean a whole new leg down. We'll comment more on that if it happens. For now, enjoy the rally, if you haven't jumped in yet, play the pullbacks and be opportunistic. Take profits when they're there. See you tomorrow.