Yesterday, in my evening post, I said,

"VIX shot up above 30 today and closed at 31.7!  Both SPX and Nasdaq closed below their July low levels (SPX 1200; Nasdaq 2200).  This downward momentum will likely carry through tomorrow morning.  Then, we'll have to see if the bottom fishers come in and how the market reacts to the attempts to bounce."

For the past month I have been transfixed by all my wireless applications on my iPhone from Apple (AAPL). Now Microsoft (MSFT), T-Mobile and Google (GOOG) are entering the fray! AAPL's iPhone App Store reported 60 million downloads and revenues of $30 million in its first month. Developing a marketplace to sell mobile applications developed by 3rd parties is growing by leaps and bounds with three new powerhouse entrants this week.

Enter GOOG: Last Thursday, Google announced it will host a new applications store called Android Market and unlike AAPL, has stressed that Android will be a central point of distribution rather than a content filter. They are choosing to use the YouTube distribution method.

Population growth is the lifeblood of all civilizations and societies. It is a carried promise of further development and prosperity in a nation. The U.S. is in fact in the midst of a mini baby boom and there are long term opportunities here for the looking. A record number of babies were born in the USA in 2007, according to early federal data that some demographers say could signal an impending baby “boomlet.”

In 2007, 4.315 million births were reported by the National Center for Health Statistics, giving us a glimpse of the growing lengthening trend in the US. This number would be a new milestone and record or the U.S. The last time the number was this high was in 1957, which coincidentally was in the middle of the “baby boom” years from 1946 to 1964. Demographers have been monitoring gradual increases in recent years; data for 2006, which won’t be made final until September, show a 3% increase over 2005. That’s the largest single-year increase since 1989.

Many investors know about the internals of the market. They are a data metric that many traders watch and read about but for some particular reason, it is not very often you see a chart where they are overlayed on their respective indexes. I think this is a real shame because they are able to convey a lot of information in a very intuitive manner.

On the chart below, I overlayed the NYSE New 52 Week Lows in green and the New 52 Week Highs in blue. Looking at the green dots, you will notice how the peaks match very well with important moves of the SPX. Most of the time the green and blue curves are fairly subdued, but each important bottom of the SPY is matched with corresponding numbers on the New 52 Week Lows. You can also notice the divergences between the blue and green clustered dots over time. The most notable divergence is occurring right now, with the market trailing up the past month, but the internals show more new sustained 52 week lows over 52 week highs, clearly showing a sickly internal bearish divergence.

Here is our earnings snapshot for the rest of the week. We built this list based on option liquidity volumes and have many useful data columns.

Key

With natural gas (UNG) and oil (USO) pulling back from recent highs, energy names have also corrected. That being said, maybe now is the time to look for some gems. Canadian Superior (SNG) and Challenger Energy (CHQ) are my favorite energy plays right now. Traders in our forum have heard me discuss the prospects of these two companies for over two months. The next step was to wait for the correct timing in regards to its “Bounty” well findings due around August 15th. Other factors such as stabilizing sentiment on the energy sector and daily technicals were also important factors. The fundamentals of both companies have not changed. Here is the background and my bullish case for both of them.

SNG is a $600 million Calgary, Canada-based exploration company. CHQ is a $125 million Calgary-based E&P energy company. SNG has operations in Western Canada and off the coasts of Nova Scotia and Trinidad & Tobago. Trinidad & Tobago is the largest supplier of LNG to the US. Trinidad is also Latin America's second-largest energy producer after Venezuela.

The best performing sector in the past month has been biotech. With investors flocking to safety due to recent financial turmoil and the sharp correction in energy, funds and investors have been warming up to biotech.

The biotech sector is not without its large risks though and investing here requires more homework and experience than most sectors. The biotech landscape is full of landmines especially with unproven companies with their yet to be proven drugs. The recent backlash the FDA has received due to major flaws in its Vioxx approval and other well publicized failed post approval drugs has made future FDA committees and agency approvals much more stringent in safety profiling and thorough in analysis of drug data.

Portugal is doing its part to invest in renewable energy with the dedication of a new 11-megawatt [MW] solar plant. The plant, which is located in Serpa, is one of the largest solar arrays in the world and can supply enough electricity for 8,000 households. This farm was created by a Swiss subsidiary of SunPower Corporation (SPWR), PowerLight Systems S.A. SPWR recently announced they would build another solar electric power plant in Llerena, Spain. The generating capacity of this new photovoltaic system is expected to be approximately 4.8 megawatts [MW] of peak power.

I heard that the term "conspicuous conservation" rather than "conspicuous consumption" is all the buzz now. It’s now real cool to be green and even the lawmakers are getting into the act. From souped up biodiesel cars and hybrids to smart energy buildings and companies, getting green not only is cool, it can now save you green.

Right now the world is being increasingly split into two groups: Crackberry Users and iPhone Phanatics. These two companies are at the forefront of the wireless revolution and will maintain their positions for the foreseeable future due to innovation and consumer loyalty. Research in Motion (RIMM) and Apple (AAPL) are locked in a battle that both will win.

The key to this unfolding story is emerging markets. A global story told by rural communities around the world and increasing penetration in emerging national cities. RIMM has made the case that its appeal is moving beyond US borders and beyond its traditional e-mail applications. For example one farm collective in Latin america is using the Blackberry to help 30,000 farmers run their crops. According to Balsillie, “Applications are everything.”

I read a new report recently from Goldman Sachs and watched another bullish report from CNBC's Fast Money. They both had me thinking about oil prices and possible future potential prices. Right now market sentiment is just horrible and remember that when analyzing fundamentals, technicals and sentiment, sentiment is the only one of the three that can override the other two.

Remember the Goldman analysts who predicted and theorized The "Super-Spike" in oil? Well they are back again and what they have to say this time should definitely perk ears. Goldman analysts Arjun Murti, Kevin Koh and Michele della Vigna raised the notion that a major disruption could spike oil to $200 a barrel. As the dollar continues to fall and commodities are seen as an instrument to hedge inflation, oil prices have been essentially melting up. The Goldman analysts said that prices have advanced more quickly than they had forecast back in 2005, when they predicted a range of $50 to $105 a barrel as part of its "super spike" oil theory.

Recently, with the VIX getting higher and the broader market driving lower, the possibility of an inverse correlation relationship between the VIX and SPX has been brought up several times. How true is this relationship and how accurate is it? The charts and data below try to get a little closer to answering that question. As usual, I got ahead of myself and started with real data and started looking for correlations between the VIX and S&P 500. However, I used only the data from September 2003 since the calculation method of the VIX changed at that point and the set ends on January 3rd, 2008. So here's what is found in terms of correlations:

The commodity boom and how to profit from it. In some ways we can see a little Mr. Plainview in all of us, can’t we? Now we have computers to mine for our profits and Natural Gas [NG] could be the next big thing as it has been lagging the other commodities. I really like this recent article from Seeking Alpha, nicely conveying on a bar chart a one year price change of the major commodities.

What is of note when I look at it, is not how much some commodities have gained but how much the others have lagged. Nickel, zinc, aluminum and natural gas have been diverging from the other hot performers in this space and I do expect this divergence to converge which is already happening as we speak. Natural gas is cheap when compared to the others based on price and price appreciation (time to play catch up). Sometimes you don’t look for answers but you look for new questions to answer.

Auspicious Autozone (AZO)
AZO is expected to announce earnings on Tuesday before the bell. AZO is expected to bring in $1.62 EPS and $1.35 billion in revenues. They have beaten 2 out of the last 4 earnings, missed one and met one. AZO is run by a smart management team and is owned by Eddie Lampert’s hedge fund ESL Investments. AZO has shown historic volatility after earnings and this week should be no exception. Last time they reported on Dec. 4th, the stock surged from a closing price of $107 to $130 the next day with a sustained run during intraday trading of $13. AutoZone operates as a specialty retailer and distributor of automotive replacement parts and accessories. There is a thesis that with the recent softness in the economy and credit crunch, people are foregoing buying new autos and putting more effort into spiffing, maintaining and fixing the ones they have. AZO has a high target of $150 and a low target of $99 by analysts.

I expect volatility after the numbers, I do expect them to beat but also raise guidance for the year. You can strangle going into the numbers but you can also wait for after, as it has shown through past historical technicals that it moves volatile after the numbers too. On Feb. 12, Kevin Dann reported that he believes the rebate checks could have a positive impact on the automotive aftermarket retailers as the timing of the checks comes ahead of the important summer driving season. They believe AutoZone (AZO) and Pep Boys (PBY) may be the biggest winners.

This week has more of a focus on steel companies and gold companies. For steel companies there is Kaiser Aluminum (KALU) Tuesday, RTI International Metals (RTI) Tuesday, Reliance Steel & Aluminum (RS) Thursday, and Cleveland-Cliffs (CLF) on Thursday. For gold companies there is Agnico-Eagle Mines (AEM) Wednesday, Barrick Gold (ABX) Thurs, and Newmont Mining Corp. (NEM) Thurs.

It will be very interesting to listen to the conference calls and the forward guidance to see how gold companies feel about prospects going forward with gold prices hovering near 52 week highs. For the gold producers, I will be listening to how, or if, the companies are hedging their gold price exposures and their outlook for gold prices for the year and how they will effectively manage their inventories and reserves. For the steel companies, I will be listening to forward guidance and the outlook on product demand, the outlook on steel prices as well as how commodity prices will affect their businesses going forward. Now on to the more interesting earnings reports coming out this week.

I was pleasantly surprised to have read an article recently on Seeking Alpha which has been able to help quantify my thoughts and thesis on why this market could go higher, not lower, from here. It helps form the fundamental paradigm shift occuring in the global economy and its effect on the US economy. Here is the article:

So the Dow will easily get to 15,000 by year’s end
By H.J. Mann

First Solar is announcing earnings on Wednesday Feb. 13th before the bell . FSLR is expected to bring in $0.53 eps with $179.48 million in revenues. High estimates call for $0.64 eps and $186.64 million in revenue. Sales growth based on these estimates would be 240%. Growth estimates for the quarter on EPS would come around 341% and 400% for next quarter. Growth estimates for the year come in at 1600%.

If they beat, which I believe they will, growth estimates for the year must be upped as well as the multiple. FSLR has a ridiculously small float at only 60 million shares with shares short dropping by 50% from November to December. The float gives FSLR explosive movement and this one could really move after earnings. It should have the same explosiveness as ISRG.

This new year is the Year of the Rat. On Friday, my father reminded me of the story of the rat and how it became the first animal of the sequence of the calender animals and it is pretty hilarious. The story goes like this, the Jade Emperor wanted to choose 12 animal names as the sequence of the calender. He announced that he would hold an animal racing to determine the order.

Once the race started, the wily, intelligent rat jumped on the horns of the Ox who was barreling away. The savvy, crafty rat knew that there was a river ahead before the finish line and used the Ox to his advantage by staying on his horns. The rat was one of the worst swimmers. As the Ox climbed out of the river, the rat jumped off of his horns and dashed to the finish line for first place! The pig well she got hungry during the race and stopped to feast and sleep before continuing and finished last (sounds just like Sasha right now sheesh!). The cat finished in 13th place and was not included in the calender because the rat pushed her off of the Ox while crossing the river!

Seems like these natural resource plays really don’t care if we are in a bear market or not. As the China snow storms and South African mining problems have highlighted the precarious global supply issues with natural resources, I have been really intrigued with how strong some of these stocks have become fundamentally and technically in the so called bear market we are experiencing. These stocks are the ones to watch in the coming weeks as money looks around for a place to park.

GLD ETF and Barrick Gold Corp.- ABX