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Logan Corbin
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Learning how to interpret and analyze business data is provacative and lucrative, I have a passion for writing and sharing my unique interpretation of markets. My 10 years of personal investment experience and MBA education have given me the tools to effectively research companies and markets.... More
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  • Tuesday Bounce Back

    After falling $36.49 to $1,552.36 (-2.3%) yesterday, the S&P 500 ETF (NYSEARCA:SPY) and the bull market in US equities looks to regain footing today. Currently, the S&P futures are green, pointing to an open that might recoup some of the sell off yesterday. The green arrows this morning are due to great reports from Johnson and Johnson (NYSE:JNJ) and Goldman Sachs (NYSE:GS) and Coca-Cola (NYSE:KO). The SPY futures are up $11.60 or 0.75%, at the time of this publication.

    Forecasts have generally pared for corporations following lower than expected results from new jobs' reports and manufacturing data, moreover slowing growth in China reported yesterday which sparked the sell off also plays into lowered expectations for US equities. The Q2 earnings might surprise to the upside for the S&P considering the low expectations.

    There are many new data points to consider today, whether that be earnings or economic data, expect the market to take some time digesting but ultimately, the bull-market seems intact. The biggest risk to US markets is a sentiment reversal. Investors' resiliency has limits, if corporations cannot pull the earnings expected or cannot produce intriguing guidance, there will be selling.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I am not a professional advisor; my interpretations of the market are independent and should not be construed as investment advice. I wrote this article myself, and it expresses my own opinions.

    Tags: SPY
    Apr 16 8:18 AM | Link | Comment!
  • Weather As A Catalyst For Energy And Natural Gas

    Intuitive thinking: Winter weather and natural gas.

    As Sandy showed the East Coast, weather plays a significant role in the economy. The infrastructure shutdown, the productivity grinding to a frozen halt, and the messy cleanup afterwards all might be regionally bearish indicators, but there are some securities really like winter storms such as Sandy.

    The chart below represents the Energy Select Sector ETF (NYSEARCA:XLE) during and after hurricane Sandy, potentially ignited by the storm:(click to enlarge)

    Natural gas is not only a significant electricity and heat producer in the US but could soon be powering cars and trucks around the globe as an inexpensive, cleaner alternative to gasoline The US has been fortunate with huge natural gas supply and now inventory that have pressed prices to next to nothing domestically. It is only a matter of time before Liquified Natural Gas is scaled to international production.

    Since the run in the XLE there have been two very powerful winter storms rolling through the continent, one being the ongoing winter storm Rocky. These have and will seriously impact the Midwest. The economic impact won't be what it was for Sandy; however, the effect over the continent is at the very least, lower temperatures. As previously mentioned, natural gas is highly demanded for many things, it represents over a third of the US furnace fuel. If temperatures are dropping, you can be sure that investors are thinking natural gas. Will the XLE continue upward because of these storms?

    As the XLE saw nice gains after Sandy the price of natural gas has decreased. How can a storm be a natural gas play if the commodity has been in a 4 year bear market?

    (click to enlarge)

    While the bear run may not be ending in the short term, gas plays can be a great long term investment. The ETF that tracks the price of natural gas is United States Natural Gas Fund, LP (NYSEARCA:UNG). If volume is a predictor of anything it is volatility and as we go into 2013, the price of the commodity looks like it might be gearing up for a run. I would argue that the cost of natural gas is not only a supply story. As the supply has increased because of fracking and new discoveries, there have also been fewer heating needs in the US, in general over the last decade. I have included a chart from the EPA on earth surface temperatures in the US (continental) to indicate there has been at least on aggregate basis, less of a need for heat than in the past for consumers.

    (click to enlarge)

    With the demand now being realized in the form of storms and therefore heat needs and the noted long term growth prospects for natural gas demand, a handful of investments would benefit from winter storm Rocky which could dump as much as 20" of snow in the Midwest. The XLE saw a run from the overall market and possibly from Sandy already, this may be an area where the run is running out of gas and selling calls here could be a great way to maximize returns. For a more focused play on gas, there is UNG, the Dow Jones-UBS Commodity Index Total Return ETF (NYSEARCA:GAZ) or the Direxion Shares Exchange Traded Fund triple levered ETF for natural gas, (NYSEARCA:GASL).

    The small cap natural gas space, however, might be poised for a short term run from the storm as well as the longer term benefits of demand growth for natural gas. To respond to impending or ongoing severe winter weather, look for Energy to benefit from the frozen fracas and it could be an excellent time to find and long a lean, profitable company with a juicy dividend so you are essentially paid to wait for whatever volatility in this sector shows up.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Feb 26 3:03 AM | Link | Comment!
  • See Why A PT Of $800 For The S&P Is NOT Crazy

    The S&P has been on a tear since digging into the $600 range back in '09. Since then, this run up of over 100% is easy to forget and even easier to forget a simlar cycle just happened about five years earlier than that as well. This chart of the S&P (SPX) portrays the all-time highs for the index and the nasty descents following. From a technical standpoint, this chart portrays major resistance near 1560 and while the current run is far different from the last run, the visual warning sign is in plain view for the index and the ETF that mirrors it, the SPY (NYSEARCA:SPY).

    (click to enlarge)

    What might happen if and when the index reaches $1565? The spectacular thing about technical analysis is that it does not care at all about the underlying details and causes for change in the market. Technical analysis can be interpreted as the objective review of investor sentiment and price momentum. Technical indicators do not depend on the results of companies or economies as much as they reflect the investors' interpretations of those results (and guidance). If and when the index reaches $1565 or a little higher then I expect a broad pullback in the market and specifically the S&P and SPY.

    The reason(s) for the pullback really could be anything; the setup for the fall is prolific.

    • There are major concerns for European economies and any one of those countries failing could devastate global markets. Moody's cutting the credit rating of the UK may not be the impetus for a disaster but represents a sign of global economic weakness. Major concerns like Greece, Spain, Italy, France, and even a smaller country like Cyprus can have explosive effects on the global economy. Whether it's Cyprus or Lehman Brothers, the fact is, one smaller entity's crisis can mean poorer guidance going forward for many others and the chain reaction is begun.
    • Unemployment has been sticking above 7.5% for nearly the entire bull-run. From a fundamental standpoint, if consumers are not working, producers will feel the pain. Many analysts want to use the term "pent-up" when referring to consumer demand even though since the last age of S&P highs, unemployment has not allowed the consumer to act as the analysts think they should, they also are challenged trying to save their money. Many families in this country are at the breaking point and this cannot be discounted as the country moves to the Affordable Care Act era of Healthcare and undecided fiscal policy.
    • War, Terrorism, Cyber-Terrorism, and other Disasters can disrupt markets, as occurred in September, 2001 and recently with Sandy and ongoing with Winter Storm Rocky. Another example of this risk is also in the news: China is allegedly hacking U.S. Government and U.S. Company servers and taking anything from intellectual property to personal information. This can amount to losing the security and infrastructure of our nation and the competitive edge of our companies.

    These reasons are maybe the most likely scenarios but thankfully predicting the actual cause of the fall is not as important to investors as when it could happen. Technical analysis is ideal for determining investment timing, as investors' interpretations of the information abreast the market is what will actually move the market and if anything, that is what technical analysis measures.

    Our current ride to $1500+ has come quicker than most expected, including me. The underlying conditions since the crisis may have improved exponentially, but there is no reason to think that we have a fortress of a market that these or other risks cannot penetrate and halve the S&P and SPY. I am cautiously long equities until the S&P reaches 1565, at which point I will be long volatility.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Feb 26 2:34 AM | Link | Comment!
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