Most investors are still nervous.

The S&P 500 has reached its highest point since September 2008. After that time though, it went on to fall 26% in two months.

Earnings season is in full swing. And with each report we see top line revenues and bottom line earnings are not rebounding nearly as fast as stocks have.

The housing market is still proving troublesome for banks too. Aside from the shadow inventory, rising foreclosures, and the expiration of the $8,000 subsidy for home buyers, bank right-offs are still on the rise.

Then there’s unemployment, tax hikes, etc.

Basically, there’s not too much to be excited about from a fundamental perspective.

That’s why I recommend making three moves now. And whether the market continues to go higher and gloss right over the real risk in this market or we’re really at the euphoric top, you won’t regret taking the next few minutes to do these today.

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It's a tough time to be looking for contrarian opportunities.

Almost every sector has done exceptionally well.

Car rental companies have delivered 500%+ returns from their lows. Banks and real estate stocks just go higher and higher. Oil's inching closer to $80 a barrel. Natural gas has recovered nicely from its summer beating.

Even long-time contrarian standbys like gold and silver stocks have, in many cases, bounced back to their 2008 highs.

The breadth of the rally has been exceptional. The run over the last six months has pushed the S&P 500 P/E ratio from below 15 in March to above 19 (as tracked by Robert Shiller's inflation adjusted, 10 year average earnings model). Also, the dividend yield for the S&P 500 sits at a low 2.28%. The index's yield has historically hit 6% or higher at true stock market bottoms.

Basically, the market is overvalued. Frankly, it has been for more than 20 years.

It will change – eventually. That doesn't mean there's no opportunity. As in all type of markets, bull or bear, there will always be safety and opportunity in value stocks. The more out of favor the sector or stock, the lower the downside risk and the greater the upside potential.

But here's the problem. After such a meteoric rise in the markets, are there any true values really left? Are there any sectors or stocks which haven’t done well in this rally?

Well, all I can tell you is there aren't many. But there is one that, due to an improbable one-time event, has barely joined in this rally at all. Yet still offers plenty of opportunity in the months ahead as well as exceptional opportunity in the next decade. And a few days ago we got the perfect "buy" signal from the markets...

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Warren Buffett calls it “a drug.”

Ireland’s finance minister calls it “a weapon.”

It’s one of the ultimate temptations for politicians.

And, quite frankly, we’re about to see a lot more of it.

Best of all though, the market is rewarding investors who have taken steps to protect themselves and profit from it.

Learn what "it" is and how you to can take advantage of this quickly emerging opportunity here

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We’re entering earnings season once again and most investors are on edge.

Will companies be able to top estimates again? Earnings estimates are low, but they’re not as low as they were last quarter when 70% of the S&P 500 beat estimates.

Will the $3.5 trillion parked in money market funds continue to make its way back into the market? Once cash and bank deposits are added in, there’s $9.55 trillion ready to be spent once consumer confidence returns or that could go chasing after stocks.

Will the Fed put an end to the party and start raising interest rates sooner than later? Australia’s central bank started raising rates yesterday.

These are all questions for the short-term though and, if they’ve been on your mind, you know how easy they are to get caught up in. But I want to step aside from the daily upheavals and look at where some of the savviest investors with a time horizon of three to five years see the biggest rewards.

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 "The main purpose of the stock market is to make fools of as many men as possible." – Bernard Baruch

The market is set to make a move…a very big move.

And it could be in a direction that would surprise and prove very costly to a lot of investors.

The markets have been struggling for the past week. Yesterday's 200 point drop in the Dow was quick and widely anticipated. It's the strongest test the bulls have had in months. So far, they're not faring to well.

But as I watched the markets fall yesterday (normally, we try and avoid the day-to-day stuff) I couldn't help but wonder if it is a sign of reality setting in? Or is it just a healthy correction to suck in even more bulls into this rally?

As we've seen time and time again, no one knows the answer. But if we look at what's going on in the markets, we can get a good idea of what's likely to happen next. And a few indicators right now are showing the market's next big move may make a large and growing group of investors look like fools.

Are You Scared Yet?

The last few weeks have been tough on quite a few investors. Most investors are on edge. Take Dania Leon for example. She's a 41-year old Pasadena resident who has held out throughout the ups and downs of the past year. She's the "typical" investor. She recently told the Los Angeles Times:

"I'm scared, I'm scared, I'm scared. Why are we up, especially with unemployment as high as it is? I don't feel great because I worry that we could have a 500- or 600-point drop in a day and I won't be quick enough to pull out of it in time."

That's how most investors are feeling right now. But if we look at the markets, the case for something more extreme than most anyone is expecting could be just around the corner...

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