Wow. So it appears there’s more than a little interest in alternative energy investing.

I’ve written about this sector before and have received a lot of email responses in the past. But you guys really poured it on yesterday and last night. I’m excited about the response rate, and now the question is how to cover everything you sent in.

So this is what I’m going to do. I’ll briefly introduce you to some of the more interesting companies that were sent in, then take a closer look at a couple of them next week. The requests keep coming in this morning. So I’ll add those to the pile if they look good.

I know that you’re all looking for ideas, so I’ll cast a wide net and you can have the weekend to check out some ideas. By the way, my office is closed on Monday so you won’t receive Small Cap Investor Daily on Memorial Day. Our normal publishing schedule will resume Tuesday.  

We’ve had a wild ride in crude oil this month haven’t we traders. Earlier this month crude prices were as high as $87 a barrel then they took a nose dive after worries that Europe’s debt crisis could undermine the global economic recovery. It also didn’t help that the EURO was completely weak against the dollar. However, after the large gap lower earlier this month – and a sharp sell off – we have nearly retraced and filled the huge gap. This area will serve as strong resistance for the time being.

It’s been ugly out there for stocks of all types lately. From the oil services to agriculture sectors, stocks have been absolutely hammered over the past couple of weeks. In many cases, stocks are now down in 2010, a mildly depressing thought given that we are essentially halfway through the year.

Alternative energy stocks have been some of the hardest hit. Sure, some of the products these companies churn out, like windmills and solar panels, could provide power in perpetuity given the renewable energy sources like wind and solar – but the stocks themselves seem to be running on fumes.

For the record, wind is actually a form of solar energy (I don’t want you energy gurus to call me out on this one). Wind is generated because the sun heats the Earth’s surface differently depending upon the topography.

It’s been hard to ignore the European debt problems lately. Greece has had its share of troubles. Real estate loan defaults appear to be crippling a few Spanish banks, and the IMF has advised that Spain’s banking sector needs to consolidate quickly to provide a more solid backstop against defaults.

These problems are giving rise to a new approach to economic governance – Euronomics.

Many banks have begun to pull back on their lending, and the London Interbank Offer Rate, or LIBOR has jumped to 0.538 percent – the highest since July of 2009. LIBOR is the rate at which banks borrow unsecured funds from other banks. And a rising rate indicates tightening of money supply, and greater stress on the world’s financial system.

Did the reversal yesterday signal a strong short term bottom? This hammer candlestick pattern sure looks good.

The S&P 500 closed up after being down by more than 2.5% shortly after trading opened. The bounce back was stoked by comments from Congressional leaders saying they would not push for banks to spin-off lucrative trading desks as part of financial regulation reform – finally some common sense from them, at least for now. Big swings in trading have again become the norm in recent weeks, similar to the volatility that helped define the market during the credit crisis and the early parts of the recovery last year. We should expect to see more as the months continue.

Over the past few months I’ve written more and more about technical analysis methods here in Small Cap Investor Daily. I feel it’s incredibly important for independent investors to have a solid set of tools to help evaluate potential investments. Otherwise we’re just following what other people are saying without using our own brains, a sure-fire way to lose money. Independent investors need to think for themselves, and act according to their own research.

So today I want to talk about another technical indicator – The Relative Strength Indicator (RSI). This is a very easy indicator to turn on when using most finance charting websites such as Yahoo! Finance or StockCharts.com. On Yahoo! Finance, use the ‘Interactive Chart’ feature and look in the drop-down tab for Technical Indicators. You can set the RSI to the period of your choice. Note that it will be in the same period as the one you select for your chart, days for a daily chart, weeks for a weekly chart, or minutes for a minute chart. I suggest sticking with 14 days and 3-month, 6-month, and one year charts until you become accustomed to using the index.

Stocks are setting up for a horrible day. Futures are down big time across the board – already more than 3% on the /ES. We are setting up for a huge sell-off and gap lower at the open. We are already past the level I posted last night as major intra-day support. The /ES is already trading near 1,040 – and must hold that level today. A close below this and we could honestly see some major selling similar to the crash in 2008.

What a week. 

If you’re anything like me, you were relieved when the closing bell rang on Friday. The combination of Euro zone debt concerns, the BP oil spill, and a market that was due for a pullback anyway had created significant volatility in stocks. Friday’s up session provided a break from the prior four day pattern of lower closes, and was overdue. It gave everyone a chance to take a deep breath and enter the last weekend of spring without visions of plunging stock charts dancing before their eyes.

At least that’s how I felt about it anyway.

Hello volatility.

Yes indeed, the v-word is back in full force. Traders are throwing around support and resistance levels on major indices as if they were discussing the weather. And people who work far outside the investment world are joining in as well.

I recently overheard a conversation between two gentlemen who clearly didn’t know what was going on in the global economy, but knew that professional investors were concerned about a stock market plunge if the S&P 500 broke 1,050.

Only one thing is certain in times like this: nobody knows for sure what is going to happen in the market. Whether it is one day from now, two weeks, or one year – anybody who says they know exactly what will happen is somebody you should turn and run like hell from.   

I would have thought that the passing of the banking regulation would have sent the markets higher today – maybe they will maybe they won’t – but its not looking good early on this morning. U.S. index futures are dropping again and oil retreated on concern the euro region’s debt crisis will slow the global economic expansion. The VIX is still at record highs and got there very quickly. Remember all the warnings about a low VIX? Here’s a couple posts to refresh your memory.

As Predicted – VIX Spikes 30%

VIX – The Falling Knife

What’s Behind The VIX’s Big Fall?

Is The VIX Setting Up To Spike?

And here we are now, with the VIX near 50. Short calls here are easy money if you get in – I’m just saying! It wouldn’t take long for the VIX to come back down near the 30 mark if we start to see the markets rally anytime soon. That could be very easy and fast money for traders.

Yesterday’s issue of Small Cap Investor Daily generated a number of responses and I’ve spent the morning reading all the comments that came in. For those of you who missed the issue, I discussed the oil rig disaster in the Gulf of Mexico. You can find yesterday’s issue here.

I owned shares of BP (NYSE: BP) before the company’s rig exploded, dumping millions of barrels of oil into the ocean. And while I’m not selling my shares now, I’m also not using the pullback in share price to add to my position.

The harsh reality is finally here; the S&P 500 is on the verge of breaking the important 1,000 level here very soon. Futures are down over 1.5% already this morning and falling. From jobs, home foreclosure data, the EURO, Oil, and new banking regulation – traders are running for safety where ever they might find it. Remember that this could turn very ugly very fast, so please make sure you buy put protection if you need it. Good luck out there today!