Exxon’s profit this quarter was less than par on Oil price declines. Notice the chart below with a very clean break and gap lower today. A move into the RED area is very likely at this point in the game. On another note, we are still heavily short but expect a push back up to somewhere around 1,075 or so before resuming the fall.

 

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Who said you couldn’t make 30% shorting this market. Take a look at CAR which Members and I shorted last Friday. It’s down almost 10% today along and over 30% since just last Friday. We actually have 5 other shorts just like this. Not because I like to talk about money, but these last couple of days have been AMAZING for my portfolio $$$.

 

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The other day I made the case that oil is going to appreciate because it is a scarce resource, and that therefore oil and gas-exploration companies were a good long-term investment. Of course, as always, a good entry price is critical. 

The same case can be made for water. And the companies that treat water to make it safe to drink, and safe to dispose of, are compelling investments. In fact, depending upon your perspective, the case for water could even be stronger. While I could get by for a while without oil, I haven't got a shot without water.

Water demand is growing for use in agriculture, industry, cooking, energy production - the list goes on and on. And we use a lot of it. While you may only drink half a gallon a day, you used around 25 gallons during your last shower. And it takes 1,857 gallons to produce a pound of beef.   

In my world, this growing demand for water means looking for small-cap companies that can alleviate the problem, and investing in the best ones.  Just yesterday, I recommended a Chinese water stock to subscribers of my SmallCapInvestor PRO advisory service. That stock is poised to increase by more than 50% on growing demand for its suite of water treatment products.

If you were to read Samuel Coleridge's entire poem, you would follow the tale of a mariner who has returned from a long adventure at sea. Despite the abundance of water, the ship's crew has no method by which to remove the salt and make the water potable.

Thankfully, technology has advanced considerably in the last 210 years. Today, the desalination process removes solids like salt and other contaminants from seawater and makes it safe to drink. It is a burgeoning industry of $30 billion today, and according to FORTUNE Magazine, it will double by 2016...

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Well it’s day two of the big entry of shorts from last week and things are still going great for members and I. I’ve been busy searching the charts for more opportunities and have narrowed down another field of dream shorts for later next week. As for now, take a look at BIDU which is falling off the map right now and a great short entry.

 

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When the U.S. stock market is flashing mixed messages, like it has been lately, I return my attention to looking for good entry prices. Unless something has changed my fundamental view of the market, these dips are the time to buy more of the companies I like, for less. Remember, buy cheap, sell dear. 

That's what I've been doing in my SmallCapInvestor PRO portfolio. So far this year, nine of eleven positions have been closed with a gain, one greater then 140%.

In small-caps, the drop is typically greater than in large-caps, and the recent market action has born this out once again. Last week the Russell shed 2.7% while the S&P 500 only lost 0.7%. But the reverse is also true, and history has shown that small-caps consistently outperform large caps on the upside. Investors who purchased the Russell 2000 small-cap index ten years ago would have enjoyed returns around 40%, versus a 20% loss for investors in the S%P 500.

I often look to overseas markets like China and India in search of attractive small-cap investments. And why not? For its part, China just reported 8.9% Thrid Quarter growth while the U.S. has stalled. India is growing GDP growth at around 6%. 

This morning, many Asian indices were trading higher after South Korea reported excellent quarterly GDP growth. We also heard encouraging news from India's Tata Motors (NYSE:TTM). The nation's largest auto maker doubled profits on increasing sales, and the stock is responding with a 6% gain. 

My readers know that I've been bullish on China for some time...

Not a bad entry Friday for our portfolio of shorts huh Members? Most are handliy down this afternoon with the indexes breaking intra-day support levels. Obviously 1 day does not make or break out positions, but it’s a good start. For all those NON-MEMBERS, now is a great time to sign up and get in on the ground level of these trades.

 

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Even with the markets up marginally this morning I am really feeling great about the long term outlook of the SHORT trades Members and I entered Friday of last week. Really what we have is bunch of completely over bought junk companies that are doomed to fall substantially over the next couple of months. We waited weeks for this opportunity and it’s here now.

 

As for the S&P today, here is what we are watching intra-day.

 

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You may be familiar with the explorer William Lewis Herndon. In 1851, he departed under orders from the Secretary of the Navy to explore the Valley of the Amazon. The four thousand mile adventure stretched from the Peruvian Andes to the Pacific Ocean on the Brazilian Coast. Lewis' mission? Seek out opportunities for trade and commerce. 

Today we heard online retailer Amazon's (Nasdaq:AMZN) results. The aptly named company crushed analyst EPS estimates which had called for $0.33 per share. Amazon beat by 36%, delivering $0.45 a share on $5.04 billion in revenue. What's more, the company raised Q4 guidance. Shares are surging 25%.

Talk about exploring opportunities for trade and commerce. It would have been nearly impossible for the average citizen in 1841 to invest in the opportunities Herndon found in the South American Jungle. But there are plenty of ways for investors to benefit from the trends in e-commerce. And small-caps are the way to do it.

Small-cap companies are overlooked and underappreciated by many investors because it's not economical for analysts to follow them. Until the companies start to break-out, and then they are all the rage. Find them when they are taking-off, and you can ride them for handsome gains...

Members – check you email account! I have entered a slew of new short positions to start building a huge portfolio for what I know is coming. I have been relatively quite these past couple weeks, but now is the time and we are plan to make a lot of money off this market in the coming MONTHS (not weeks you day traders).

 

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Yesterday, oil rallied to close above $81 a barrel, the first time the precious commodity has hit that level in 2009. Oil prices gained momentum after the U.S. government released a report showing that crude inventories rose by half a million barrels fewer than expected.   

The rise in oil prices, and many other commodities prices for that matter, has many wondering if the market is too bullish given that economic growth is uncertain. Plus, much of the rise in oil has come on the back of a falling dollar.

You’ve probably heard that renewably energy sources like wind and solar will reduce the demand for oil. Government programs that incentivize their use have worked in places like Brazil. But overall, they haven’t slowed the relentless rise of oil prices.

While these factors might make the rise in oil prices seem unsustainable, it’s more likely that normal supply and demand relationships will resume when the economy gets back on track. In other words, higher prices are coming. Peak oil (the point when the world reaches a maximum rate of petroleum extraction, after which production will always be declining) adds an interesting dimension as well. Some experts think we’re past this point, some think it won’t arrive until 2020...