Well, this is it - do or die time for the bulls. I've said a handful of times now it's easy to be bullish when stocks are rallying, but the real test of that bullishness comes when stocks are falling... will the market stay in that same buying mood? Right now it's still a little early to come to a conclusion. Indices are tanking more than a full percentage point today, but after a 17% upswing in less than a month, a pullback of that size could be expected without it meaning we're getting ready to crater. In fact, the market deserves a pullback even bigger than that before we have a need to worry. I'll slice and dice it for you below, but I want to take care of a couple of other things first. One, I want to give you the details on the earnings scoreboard I started a couple of weeks ago, and two, a quick update on a a stocks we shared with you recently. We've also got a couple of featured stories from the site worth a look. Q3-2011 Earnings Reality Remember in August how the media was regurgitating opinions that third quarter earnings were going to be a disaster because the economy was re-entering a recession? Remember how high unemployment was finally catching up with consumer spending (2/3 of our economy), which was finally going to slow as consumer confidence hit multi-year lows? Yeah, well, with about 2/3 of the S&P 500's companies having reported Q3 results so far, all those forecasts have been proven to be crap. The S&P 500's operating earnings expectation for third quarter was $24.07 right before earnings season began. Now it's $24.98. Given the 70%/20% 'beat/miss' ratio we've seen to date, that figure will likely get over $25 per share by the time Q3 earnings season is over. What happened to the disaster? There are still folks who say it's coming, citing a weak economy as the inevitable market killer; Q2's GDP growth of 1.0% - which was revised to 1.3% just a few days ago - is the evidence of that weakness. Of course, it doesn't explain how GDP growth rebounded to 2.5% last quarter when we were supposed to be in dire straits. There are explanations for the sudden uptick on GDP though. The same guys who were pounding the bearish drum after Q2's initial data are now saying it doesn't fully reflect inflation, with some arguments saying that the GDP figure doesn't really matter at all.... which is particularly interesting because it sure as heck mattered when Q2's weak number supported their bearish thesis. Must be nice to pick and choose when the data is legitimate enough to use and when it's not worthy (and just so happens to be worthy as long as it aligns with your theory of the day). Look, I don't know what Q4 or next year holds in store. Nobody else does either. I do know that Q3 earnings are approaching record levels though, and have been stronger than average in terms of the number of beats and misses [not a theory - that's reality]. And, I do know that even the reeled-in forecasts for Q4 are still at a record-breaking $25.15 level. I also know that 2012's operating estimate of $108.75 'per share' for the S&P 500 is a record-breaker, even if the growth rate between here and there isn't great. I also know stocks are still as cheap as they've been in years. Critics of the numbers have pointed out - and rightfully so - that the bulk of that growth s coming from Asia, with U.S. and Europe being weak links. And, it's basically true. My question is, so what? Now the 'slowdown' chatter has started to surface about emerging markets, but again, we're not seeing any actual evidence of that slowdown. We're just hearing the rumors, mostly from the same folks who were looking for a pitiful Q3. Folks, I'm all for being proactive and predictive, but unless we can do it with a data-based level head, the media's going to sling you all over the map.... and that rarely bears fruit. Medallion Financial (TAXI) Racing Holy cow. I had a strong feeling I was onto something when I told you about Medallion Financial (TAXI) back on October 10th when it was trading at $9.90. I rekindled that optimism last week, saying the sizeable gain for anybody who was in it merited some defensive-minded thinking. With today's 4.4% jump though, any TAXI trade has officially reached 'crazy' levels. At the current price of $12.00, this thing is up 21% in three weeks. So what's the right thing to do here? That's up to you. I told you about a stop-loss idea last week that takes the emotions out of the decision-making process, and I'm still a fan of that concept. With such a string move though (and a couple of lingering gaps), this may be a case where it makes more sense to make an exit on the way up rather than wait for it to give up any ground. Or better yet, when in doubt, I like to split the difference. In the case of Medallion Financial, that would mean selling half as we reach this new high, and then holding the other half and let it be stopped when/if it reaches its parabolic SAR levels I told you about a few days ago. That way if for some reason it does continue to soar, you've still got some exposure. And if it doesn't, you've still got your defensive play ready to go. Like I said, it's your trade and your call - none of these ideas are official. I just know that more often than not when it seems like things can't go higher, they usually don't. I tend to regret not making an exit a lot more than I regret making one. Is the S&P 500 Ready for this Attack? Don't sweat today's dip - the market deserved a break. Even with the pullback, this month is on pace to be the best month for stocks since the 80's. That doesn't exactly scream 'weakness'. Let's at least give the bulls a chance to take a breather before digging their grave. Realistically, we should be willing to let the S&P 500 slide all the way back to the 1230 area or so, which was the ceiling up until last week. That would only be a 5.1% dip from the recent peak... more than tolerable after a massive runup. For that matter, we may even want to give it a little more leeway than that. Maybe 1190. The good news about today's dip is that it's unfolding on very low volume, which tells me this isn't necessarily a majority opinion. This is mostly just some profit-taking from short-term buyers who have an opportunity in-hand. Seems like most people are staying in, and still giving the benefit of the doubt to the market for the time being. We'll line up in that camp for now, but this is far from resolved.