Priceless irony.

It proves Americans, especially us East Coasters, aren’t the only ones with size-management issues.

As the markets sink under their own weight today, I cannot help but think much the same is taking place on Wall Street. The equities market can only hold so much fat before it gives up support and comes crashing down.

I rarely use technical analysis as a primary analytical tool, but I will use the help of charts and lines to back up my opinion and help find out exactly where trouble may lie in the road ahead. Just like we don’t drive by staring at a roadmap, we can’t invest solely on the charts. But when you’re lost, there’s nothing like a quick glance at a map.

When I wrote to TFN Strategic Trader members this morning, I told them to watch the action of the S&P 500 closely. The key index hit the pivotal 1,150 mark yesterday and almost immediately turned the other direction.

It is a sign that investors need to prepare for a correction. We are seeing the front end of the action today as the markets give up more than 1% of their value.

If you are a frequent reader of Notes, the action is no surprise.

Only an economic fool believes massive government spending, bailouts and increased regulations will lead to a sustained rally.

There is no way current valuations will hold unless we get two things, more jobs and more credit. Everywhere I look, companies are begging for loans and laying off more employees.

Get this. Over the last decade, for every dollar this country saw in GDP growth, we took out $6.02 in additional credit.

Now that that credit has dried up and, even worse, has left massive holes in corporate balance sheets, there is no way we are going to realize higher valuations until we either restore credit or shake out all the marginal players.

According to the front page of my local newspaper, the latter is happening quicker and quicker. Just today we lost another major employer and a local restaurant. Even worse, a local school district is figuring out how to close a $200 million budget gap now that it has raised taxes as far as it legally can.

It’s the same kind of story all over the country.

It’s evident that investors are pulling their money out of stocks and putting it back into the safety of the Treasury market today as the yield on the 30-year plunged by double-digit proportions.  As much as investors hate America’s borrowing habits, Uncle Sam remains one of the strongest protectors of assets.

Until that changes, we aren’t going anywhere.

*** Don’t think the news out of JPMorgan Chase (NYSE:JPM) is any indication that we are on a path to recovery. This bank and its Wall Street brethren are raking in profits as the markets re-inflate after the credit bubble collapsed.

In fact, they’d love to see it pop once again as they hedge away their risk and profit no matter which way the market swings.

As long as they are covering all sides of the trades and have Washington chasing its regulatory tail, we are going to see these financial smartypants raking in huge profits and walking away with mouthwatering bonuses.

But their profits don’t say anything about small-town America’s ability to prosper. Instead, Wall Street’s profits show how volatile and dangerous it is to be trying to make a buck in this country.

If JPMorgan is making money, somebody else is losing it.

That’s why it’s great to be a contrarian investor. We don’t get fleeced with the herd.

David Fessler (Money Morning):

By the time 2009 is in the books, the record will show that solar energy stocks endured a tough year. That’s hardly a surprise, given that so many Wall Street analysts (yours truly not among them) lambasted the sector for much of the year.

Analysts also expect the carnage to continue into 2010, and are predicting losses for as many as half of the world’s solar companies.

The “thought process” of a Wall Street analyst – and I use that title loosely – goes something like this:

• Analysts first suggest that a “huge” oversupply of polysilicon (the raw material used to make silicon-based panel assemblies) exists. But this is only partially true, as increasing panel sales are rapidly eating into this oversupply.
• The analysts’ next miscue is over new thin-film panel technologies. They predict companies producing panels based on the new thin-film designs are doomed because the oversupply of polysilicon will keep poly-based panel prices too low for the thin-film guys to compete.

Talk about a myopic view if there ever was one. I suspect many of these analysts will be eating crow instead of turkey for Thanksgiving dinner next year.

In the meantime, allow me to outline the real story on the solar energy sector…

Click here for the rest of Mr. Fessler’s analysis at Money Morning.

Baltimore — (TFN): We all have a friend like him. For me it’s a guy named Greg. He has some great ideas and his entrepreneurial spirit runs deep, but for some reason, his plans never seem to make it to fruition. Somewhere from the drawing board to the production line, he runs into a debilitating snag.

Most of the time, it’s money.

He’s got great ideas but nary a penny to his name. That’s why I told him to ring up old Uncle Sam… collect. Washington’s handing out all sorts of dollars these days. He might as well put his hand under the waterfall.

According to the Wall Street Journal, the Department of Energy is handing out some $40 billion just to the so-called “clean energy” sector. Greg needs to paint a tree on his latest invention, call it organic and break into 21st century politics, er, business.

From here on out, it’s not what you know, it’s who you know. With Obama acting as economic maestro-in-chief, it’s a whole new world for us business folks.

Which brings me to a sore subject. You see, I recently told Hot Stock Confidential members to buy shares of a tiny little up-and-comer named Raser Technologies (NYSE:RZ).

Now, before I go any further, I don’t want to hear any complaining that I only talk about my winning plays in Notes, because this one was a loser. A big fat flop. Right now, we’re down 45%. It was one, if not the worst recommendations I made this year.

But I’m not selling. Even though I got plenty of heat from internal and external “forces,” I am still not ready to suck it in and lock in the loss.

I’m not holding out because the company’s got a breakthrough product or is about to get bought out. I’m holding on because Uncle Sam is ready to cut Raser a big ole’ check.

When I initially recommended the company in late August, headlines were abuzz with “green” spending. But then, just as suddenly as it started, it stopped. Congress switched gears to healthcare and Raser shareholders were left in the dust.

But Washington never stays in one place too long. It makes for an easy target. So once again, the clean energy industry is heating up. The article in today’s Journal proves it.

With Stimulus 2.0 ready to be released and the DOE spending like an eighteen-year-old who just unlocked his trust fund, this is a fantastic time for Raser and its geothermal electricity production.

After all, just last week it announced it was applying for a Treasury Department grant that could put $33 million into the company’s coffer.

For a firm with a market value of just $90 million, $30 million can do great things.

This play may not have followed a traditional route and is certainly a move that would make any financial advisor soil his suit, but in today’s financial environment, when the government acts as the lender of choice, traditional rules are out the window.

While fundamental investments still have long-term merits, for us short-term traders and especially us contrarians, some of the best investment opportunities can be uncovered by following the White House press pool.

*** Speaking of money, how about Exxon’s big deal today? For us contrarians, the $31 billion, all-stock deal proves the world’s largest oil producer believes its stock is overpriced and ready to fall.

If you’ve read my work for any length of time, you likely know that I am a big fan of signaling theory. According to the common-sense notion, Exxon’s unwillingness to use any of its massive pile of cash is a sign that company executives feel a $69 share of the company is worth less than $69 in cash.

It is no wonder we are watching shares drop by more than 4.7% today. In the long run, today’s news will boost Exxon’s performance. But in the short term, investors have an awful lot to think about.

By far, the biggest news surrounding this story is not what it will do for Exxon or XTO shareholders, but what it will do to the natural gas market.

It’s exciting stuff, especially for those of us that just racked up triple-digit gains thanks to the industry’s recent meanderings. I’m talking to you TFN Strategic Trader members.

Here’s what I wrote for the TFN site today:

“You don’t become one of the world’s largest and most profitable companies by making dumb moves. Exxon Mobil (NYSE:XOM) proves it once again.

“The Street is buzzing today thanks to news that Exxon is printing some $31 billion worth of new shares in order to purchase XTO Energy (NYSE:XTO), one of the nation’s natural gas producing giants. It’s a major deal that has hearts skipping across a variety of sectors.

“Of course, nobody is as excited as XTO shareholders. They woke up to news of a buyout worth a 17% premium to Friday’s closing price.

“Shares of the oil and gas producer slipped by double-digit proportions over the past few months as natural gas prices slide. But now that demand is rising and gas prices are following suit, Exxon officials saw it was time to make their move. With XTO prices reaching short-term lows, Exxon made its move.

“Now that a major non-conventional gas player is making headlines, investors have their eyes on all sorts of potential buyouts. It’s almost impossible to find a company in the energy industry not trading in higher territory today.

“Two stocks you will hear a lot about over the next couple of weeks are Chesapeake Energy (NYSE:CHK) and Range Resources (NYSE:RRC).

“So far today, Chesapeake is up by over 6%, with shares trading close to $25.50 each. The company, with major holdings in all of the popular shale regions, has been a long-term target of buyout rumors. Maybe this time the speculators will be right.

“But my money is on Range Resources. It is a major player in the Marcellus region that just happened to announce significant expansion in the area this morning. Coincidence? Doubt it. It looks more like advertising.

“Range is the right size for a buyout. With a current market value of $7 billion and another $3 billion or so in debt, a buyout could come with a price tag of just over a third of Exxon’s purchase. Whoever decides to grab the company (think Shell or BP) would automatically get more than 180 Mmcf of daily gas production out of the Marcellus region.

“Of course, this is a long-term play. With gas prices plunging to ultra-low territory in recent months, any company purchasing gas assets now has a long-term outlook. With non-conventional plays hotter than a barroom pistol, major producers like Exxon are flocking to the sector in hopes of finding larger profits than their current low-margin deepwater prospects.

“For all of you fans of deepwater drilling, that is bad news, even horrid.”

Read why here.

*** Hey, lookie there. Gold’s up today. With word that Congress is ready to budget yet another couple trillion bucks, the dollar’s a tad bit weaker today.

As I write, gold is up by $3.70 per ounce and the dollar’s down just $0.0019 against the euro. Doesn’t look like buyers of either asset have much conviction.

Today’s just a short-term turnaround in the recent trend. Expect more strength from the greenback and more weakness from the gold market. By the time we sing Auld Lang Syne in a couple of weeks, gold will be trading for $1050 per ounce. That’s when you should be a buyer again.

Baltimore — (TFN): Somebody get a bucket because I’m about to puke. I am having an impossible time trying to digest what I’m reading and hearing this week.

How could things have gotten this bad?

My sister is one of those liberal teacher types with an ideology that so many of us like to pick apart. It’s sort of a sport of mine, but she understands and takes it like any sister should take a sibling rivalry. She drops her kids off at my house with little to no notice.

With our divergent political beliefs, you should have no problem guessing my reaction when she recently told me she was applying for dual citizenship in France.

“I just want my kids to have the best opportunities available to them,” she said. I just about plopped my pants when she showed me the paperwork. Opportunities… in France? She’s got to be kidding me.

But it turns out, big sis may be getting wise in her old age. After the news I heard this week, I’m thinking about sneaking through her back window tonight and rifling through her drawers. I want to know the process.

France is starting to look like a libertarian’s dream.

What pushed me over the edge? It wasn’t mandatory healthcare. Or a global tax on Wall Street. Or a Nobel Prize. Or pay caps. Or Cash for Caulkers (but that was close).

It was the news that Congress is working on legislation that would force the NCAA to go to a playoff system.

Yes, just days after committing tens of thousands of young men to a savage war and in the midst of figuring out how to redistribute a vast percentage of the nation’s GDP, a House subcommittee took the time and the tax dollars to discuss the BCS bowl situation.

Normally a subject reserved for sports editors and afternoon talk show hosts, our leaders feel this is a vital move for the American people.

Darn I’m glad I’ve got such a visionary sister. She saw this coming months ago. I just hope there’s time to get out before they lock us all in.

*** I know, I know. Many of you are saying what in the world does this have to do with contrarian investing.

My answer… everything.

Just imagine this country’s future, economically and politically if we have a government that believes college football or even mandatory healthcare is any of its business. Do you think we’re ever going to see the Dow hit 14,000 ever again?

Not unless Obama makes it an order.

I know a lot of investors think gold is the answer, but it isn’t. Hopefully this week’s plunge helps illustrate the point. With just the stroke of a pen, Obama could pull a Roosevelt and suck it all back in. You remember Executive Order No. 6102, right?

The answer is international exposure. Just like my sister, your portfolio needs dual citizenship. If you’re sitting on nothing but domestic positions, you are sitting on a time bomb. Tick… Tick… Tick…

Fire your advisor then seek international diversification. My preference is anything Chinese, but Australia, with its rising interest rates, and even Brazil (it already beat Obama once) aren’t looking too bad.

*** Earlier today, I told TFN readers about a Chinese car retailer that’s been making strong headway (i.e. triple-digit revenue growth) over the last year. If you’ve been reading anything from the group’s publisher, J. Christoph Amberger, you know the Asia car market is red hot.

Here’s a section of what I wrote:

“While the Chinese yuan is anything but free-floating against the dollar, a stronger American currency will certainly have an impact on any country exporting goods to the States.

“That’s just part of the reason why shares of AutoChina International (NASDAQ:AUTC) are up by over 15% today. The other major catalyst is the company’s latest fiscal results.

“The Chinese auto retailer is a relatively young company with a market value of $270 million and some 25 dealerships spread across the country. In case you’re not familiar with the Asian market, it’s red hot right now.

“The quarterly figures prove it. Over the last three months, the company recorded revenues of $242 million, a whopping 110% increase over this time last year. It turned the sales into a bottom line of $7 million, yet another triple-digit increase over last year’s figures.

“If you are frequent reader of TFN articles, AutoChina’s action is not new. We’ve been tracking and writing about this stock for months, as it share price quickly climbed from just $7 to over $30 and back to $24 today.

“From here, you can expect shares to top out near the $30 range once again in coming months if current macroeconomic trends (including the strengthening dollar) continue.”

You can read the original piece here.

*** Finally, political incompetency doesn’t stop in Washington. Oh no, state governments are just as useless. Isn’t that right, Arnold?

At home in Pennsylvania, we’ve got a gambling debate on our hands. Right now, slots and electronic forms of poker are perfectly legal, but bring that animated dealer to life and give him a good-paying job, and it’s illegal.

Of course, a political debate like this can’t go on without a little bit of leverage. Tied up with the gambling bill is funding for the state’s major colleges.

That’s right. While the local bozos determine what cut of gambling revenues will go to their campaign funds, tens of thousands of students are looking at higher tuition bills next month as schools like Penn State see their funding held as a political hostage.

In France, my sister’s kids won’t have to worry about tuition… it’s already included in the tax bill.

This story goes well beyond Murdoch’s decision to start charging for his company’s online news content. It is a debate about monopolies and the government’s role in protecting or destroying them.

In case you missed it, there is a great editorial in today’s Wall Street Journal by the CEO of Google, Eric Schmidt (scroll down for link). In the piece, the doctor doesn’t necessarily lash out at Murdoch and his recent attacks aimed at Google, but the desire to call Murdoch a crybaby is obvious.

Schmidt makes it clear that Murdoch’s woes are not Google’s fault, but are the fault of an industry that has sat on its hands for the last decade as competition quietly, but firmly snuck up to the back door.

Now that Murdoch owns a very expensive media empire, his plans are to use his massive industrial weight to keep the media industry from swaying in any direction. He’s certain that charging for his content will force his customers from straying to competitors.

Of course, Schmidt has something very different to say. Essentially, the CEO tells Murdoch to start getting creative. His company is dumping 100,000 clicks a minute onto the online news sector. If the industry can’t find a way to profit with some four billion hits a month, well, it’s not Google’s fault.

The answer lies somewhere in the middle. But of course, Washington thinks it can solve the problem. As you read this, Murdoch and his gang are discussing the “future of journalism,” with the Federal Trade Commission.

They are not down there asking for a bailout or inquiring about tickets to the next state dinner. They are asking for (or flat-out buying) protection from the anti-trust gang.

Just like a Manhattan businessman goes to Guido looking for some “fire insurance,” Murdoch and company are in Washington asking for protection from the ankle-biting competition.

What does Murdoch want from Obama?

He wants what every man wants, the ability to buy more. Under current regulations, Murdoch is unable to make purchases in certain rival publications and media outlets. But with the notion of critical mass on his side, if he could get the right to buy and control his rivals, he would have a much better shot at coercing the industry to move in the “right” direction. He could save journalism as we know it.

Will Washington bite?

Um, let’s see. With a horde of newspaper and television ad space on his side, does Murdoch have anything to give to politicians in exchange? This one’s a no-brainer.

If politicians can get on the good side of Murdoch or his competitors, the political campaign process may not be quite so expensive in 2012.

So here’s my first official prediction for 2010: Washington is going to take action and the media industry is going to be a hot one.

We got a first glimpse of what’s to come early today with the finalized deal from GE and Comcast. The next year, especially if Murdoch makes the right moves, will be filled with similar stories of consolidations and acquisitions.

Giants like Time Warner and Liberty Media are going to be players. And little guys like Virginia’s Media General and McClatchy will be in play.

It is going to be an interesting year as the industry finally gets serious about finding a clear strategy for the future.

Smart investors will make good money from the action and smart contrarians will know the money flows right back to Washington.

*** You have got to love the action from the natural gas markets these days. Even I, the bear of bears, wasn’t expecting yet another injection into the nation’s gas storage facilities this week, but what’s investing without surprises?

Thanks to today’s news, we were sitting on gains of as much as 415% on one of our three remaining natural gas plays. The lower gas prices go, the higher that figure will climb.

Here’s what I told TFN readers today about the nation’s natural gas glut:

“I am about as bearish as it gets when it comes to natural gas, but even I underestimated how bad the situation really is.

“While most analysts were expecting the year’s first official drawdown in the nation’s natural gas inventories, I conceded and said they were right. I expected a drop in supplies of one, maybe two, billion cubic feet of gas.

“Most analysts expected twice that figure as the nation starts to crank up its thermostat. After last week’s smaller-than-expected gas infusion, a withdraw this week looked like an easy call.

“I was so certain, I recommended TFN Strategic Trader members lock in gains on a couple of our natural gas plays. We locked in gains of 56% by selling half of our position in one play and 50% gains by unloading another play in its entirety.

“It looks like we jumped the gun.

“According to the Energy Information Agency’s latest report, released at 10:30 this morning, the nation managed to produce more gas than it consumed once again.

“This time last week, the agency showed a gain of one billion cubic feet. This week, the figure doubled to a weekly increase of two billion cubic feet.

“Under normal circumstances, this would not be much of an issue. But the nation’s storage facilities are 99.9% full and pipeline pressures are rising as suppliers try to squeeze in as much of the fuel as possible.

“So far, natural gas futures have not reacted too strongly to the news (which helps prove my theory about selling yesterday). December gas contracts are down by just $0.035 so far, which puts the price at $4.495.

“As the winter rolls on and investors and analysts finally realize this winter will be unlike any other for the natural gas market, that price will sink lower and lower.”

Keep reading here to read about several of the ways to take advantage of the situation.

*** Finally, there’s a celebration in my hometown tonight. We got word early this morning that Harley Davidson has officially decided to keep the doors open at the factory that employs nearly 2,000 local workers.

Of course, at least half of those workers will be asked to leave over the next couple of years and the remaining workers will be working harder and getting paid less, but isn’t that the way it works these days?

Maybe we shouldn’t blow up the celebratory balloons just yet.

London , England

We got back from South America on Friday… ready for a rest. So, we spent the weekend reading… and occasionally, thinking.

What we’ve been thinking is that the dollar is dead meat in the long run. But in the short run, it might have enough life in it to bite investors on the derrière.

The US stock market rose 73 points on Friday, to bring the Dow just 30 points south of the 10,300 mark. Why is this level important? It’s not really. But it reminds us that this is still just in “bounce range.” Big drops in stock prices are followed by bounces – always. A bounce of 50% of what was lost is not unusual. That’s what happened after the Crash of ’29, for example. So, there’s nothing exceptional about what we’re seeing on Wall Street.

But here at the Daily Reckoning we’re not smart enough or fast enough to play the countertrends. We want investment positions that we can ignore for years… We want to be able to go on a long trip… say, down the Inca Road or over the Hindu Kush. And when we come back, we want to find that we have at least as much money as when we left.

If stock market buyers – in the US – have more money a year from now than they have now, we’ll be surprised. The private sector is still more than 2/3rds of the economy. And the private sector has begun de-leveraging. Nothing that has happened in the last 8 months makes us think that that trend is going to reverse any time soon. There are 70 million baby boomers who need money for retirement. They’ve got to save. That means cutting back on spending. And that means less income for business. Are stock prices really going to go up when business income is going down? No.

We leave our “Crash Alert” flag flying, here at the worldwide headquarters. We don’t know when… or IF… stock prices will crash. But the downside risk is not worth the possible upside. Daily Reckoning readers should be out of all US stocks, except those they wouldn’t mind holding through a 50% correction.

The other thing we mistrust – aside from politicians, stock promoters and tap water – is the dollar. But here the story is more complicated. Because the next downswing in stocks could push the dollar up! Everyone is betting against the dollar. And most think it is a one-way gamble. But it’s not like Mr. Market to grant investors a one-way bet. He’s got something up his sleeve.

Last week, the Financial Times reported that a group of IMF economists had made a “Plea to reduce demand for dollar reserves.”

That is another way of saying: find something else to put in your vaults rather than dollars!

To read the complete article at The Daily Reckoning, click here.

I hear it a lot from inexperienced Wall Street analysts, bloggers, and money managers who spend little time living in the “real world”.

Here’s what they’re saying: “Gold is way too popular now… It’s near the end of its bull market.” The recommended “action to take” is to cash in your gold profits and move on to something different.

I can tell you that taking this advice is a big mistake. Anyone who believes gold is too popular with the mainstream public simply doesn’t know who the mainstream public is… and they don’t understand how bull markets end.

Sure… gold is up big since it broke out to a new high in September. In just over two months, it has climbed from $950 an ounce to $1,100 an ounce.

Click here to read the rest of Brian Hunt’s analysis of the state of gold, published online at Fleet Street Invest.

Judging by the sudden rise in fame of Levi Johnson or Balloon Boy’s antics, the human brain is far feebler than we give credit.

And so are the markets.

If you have taken a basic finance class anytime between 1965 and the present, you have likely studied Eugene Fama and his efficient market hypothesis.

Essentially, the University of Chicago professor created a cult-like following of investors and academicians that believe markets entirely reflect all known information and instantly react to new information.

For example:

When I told my ever-optimistic, ever-“hopeful” colleague, Laura Cadden, the news the majority of Obama’s infrastructure stimulus would finally be doled out sometime early next year was already priced into the market, I was showing my belief in efficient markets.

When she gave me a look that curled my toenails, I knew she didn’t believe in such “nonsense.”

The difference between efficient market “believers” and “non-believers” is as strong and divided as the difference between the Left and the Right. In many cases, in fact, the same arguments are involved.

It’s obvious these days that the Left does not believe in Fama’s theory. Why else would it build new regulations and reforms in an effort to limit market freedom?

The Right, on the other hand, with its unending determination to “let the markets handle it,” believe efficient markets will govern and regulate themselves as long as politicians keep their busy hands out of it.

Most of Wall Street tends to follow the Right’s path, realizing the more we know about an investment, the better the decisions we can make.

But it doesn’t matter what you and I think. We aren’t in charge.

Right now, the Left is in charge.

That means free market economics have got to yield to big governments and ever-increasing regulations.

That makes guys like Chris Dodd happy.

Just a few of hours ago, the Senate Banking Committee’s chairmen released an 1,100-page draft bill that takes the very notion of efficient markets and capitalism working hand in hand and tosses it out the window.

Instead of letting a Darwinian-style market separate the strong from the weak, Mr. Dodd wants the government to do the work.

His monstrous bill, which is still nearly 50% shorter than Pelosi’s anti-market healthcare package, finally calls for the “change” so many folks voted for last November.

The Feds power to regulate banks is eradicated. The FDIC role is limited. A new consumer protection agency is created. Executive compensation is in play. Credit-rating agencies will get new guidelines. And of course, the derivatives industry will be re-tooled.

Welcome to the new America, my comrades.

Washington is working to do everything it can to make the markets as inefficient as possible.

It is one more piece of information that proves that human mind is greatly overvalued.

*** Just to prove that efficient markets are still at work and new information can make or break a portfolio, the natural gas industry is reeling today as the International Energy Agency officially warned of a global glut of the vital energy source.

Gas prices are down to their lowest levels in weeks after the agency warned of a strong decline in demand this year and a massive spurt in new production.

As I write, natural gas is trading for $4.483 per MMBtu. Less than a month ago, that figure was just shy of the $6.00 mark.

It’s a downward trend with no end in sight.

Fortunately for TFN Strategic Trader, the news means just one thing, big gains.

I recommended four ways to play the situation recently. Earlier today, all four picks were worth double-digit gains, with one doozy up by 324%.

There’s still time to get in on the action. Read my exclusive report right here.

What a time to be part of such a popular, well-regarded newsletter. From what I’ve heard and read, Notes subscribers are some of the most-informed, thought-provoking readers anywhere. I sincerely look forward to opening a dialogue with all of you.

As you know, there has never been a more pivotal time in this country’s financial future than right now.

The dollar is weak.

The word “jobs” has become an atrocious four-letter symbol for economic despair.

The government owns Detroit, Wall Street and is desperately trying to get its hands on healthcare.

And, worst of all, China could eat our economy for breakfast.

Indeed, there will be no shortage of topics to discuss over the next few months.

But first, you are owed a proper introduction. I am hoping to get to know many of you through commentary and feedback, but before you can drop me a line, you have to know who you are writing to.

First and foremost, if you are looking for Wall Street flash, I’m not your guy. Far from it.

I’m not a Mercedes and gold watch kind of investor. In fact, I drive a pickup truck to the office and wear a digital watch that I bought on Amazon for $14 a few years ago.

When they were handing out made-for-TV personalities, well, I must have been out fishing that day.

That’s fine with me.

Too many folks talk too much and think too little. After all, what is talking? In most cases, it’s nothing but a bunch of hot air, especially in this game.

Like that bunch on CNBC. Don’t get me started. How a few headline reading clowns became the face of finance is beyond me. For most of them, it’s dissecting Wall Street in the morning and hocking OxyClean in the evening.

These guys won’t ever let facts get in the way of their opinion.

If you want facts, I will give you facts.

How about a market that is still 30% below its highs?

Or $80 oil in an economy that is screaming, “No mas!”

Or an American dollar that is weaker than Obama’s economic acumen?

Or a Fed Reserve with more power than any unelected board in global history?

I could go on and on about the subjects that keep today’s investors up at night, but what would we discuss in the coming days?

Like I said, there has never been a more pivotal time in the nation’s economic outlook. Even better, there has never been a time to be at the helm of a popular contrarian newsletter.

You are my kind of people. The thinkers. The realists. You don’t talk just to make noise. You think, then discuss. I am excited to see what we get into.

*** Now that you know a bit about me and the way I think, let me share some of my recent work with you.

As you know, the commodities market has been off the charts over the last eight months or so. Just about everything that can be pulled from the ground has soared in value as investors from across the globe have flocked to anything with a tangible value.

With a weakening dollar, the appreciation is understandable. With everything but natural gas, that is.

Natural gas is America’s fuel. The vast majority of what we produce is used within our borders, with very little demand contained in the export or import business.

Even though a nasty recession has significantly reduced natural gas orders, production is on the rise and prices have more than doubled in recent months. With natural gas reserves nearly full and the winter’s increased demand yet to show up, the markets are about to realize they made a horrific mistake.

Natural gas is unlike any other commodity. It has nothing to do with currency or global economic health, yet speculators treated it just like oil or even gold.

Bad move.

Traders are now paying for their mistakes.

Besides writing articles and commentary for TodaysFinancialNews.com, I am also tasked with running an options trading service called TFN Strategic Trader. It is a fast-moving easy-to-use options service that loves to take advantage of short-term market mistakes.

Less than two weeks ago, I lifted the curtain on my latest special report, an in-depth look at the nation’s natural gas industry. At the bottom of page 5, I listed three trades that offered triple-digit gain potential.

I admit, I made a mistake.

I said the gains would come by January 15. I was too conservative!

Already, two of the plays are up by 140% and 170%, with the third up by just 13%. Those two big gainers and one soon-to-be big gainer alone could easily make up for two years worth of market losses for investors still suffering.

But we are not cashing in yet. The best is yet to come. You can read the full report here.

*** The next few weeks and months are going to be quite interesting. I am not one to scream and shout, but let’s face it. Our nation and economy ain’t what she used to be.

Instead of protesting with a teabag or pleading with your congressman, I’d rather you protect your wealth, make you some more money and ensure that no matter what happens, the life you know is not going anywhere.

We’ll fight back, but not in any way they are used to seeing.

Our memory of the recent rally was on kicked-off by a bogus memo from Citigroup CEO Vikram Pandit about profitability, followed by a load of baloney from stress test regulators about banks’ health.

“People also are beginning to question whether the economic fundamentals are strong enough to justify continued gains,” continues the WSJ. This has got to be one of the most naïve sentences ever written. The 40% rise in stocks since early March never had anything to do with a 40% increase in economic fundamentals. The economy is collapsing (albeit at a slightly slower pace than before).

Stocks rose because the same “irrational exuberance” that got us into trouble in the first place caused investors to ignore economic fundamentals and pile into equities on the basis that the government wouldn’t let any more failed companies go bust. At no point during this rally did economic fundamentals improve. Economic news was simply less bad than before.

The following three indicators should make it patently clear to investors that stocks are in trouble.

1. There has been a consistent drop in trading volume going back to April. Average daily volume for all NYSE stocks hit a record of 7.21 billion shares in March (much of which was thanks to program trading by Goldman Sachs on the bank’s principle account). That fell to 6.42 billion in April… and 5.14 billion in May. This is below the average of 6.15 billion shares traded a day in 2009. In a true bull market, trading volumes tend to rise as more and more investors pour into stocks.

2. New stock issuance hit a record in May. This has dramatically increased supply at the same time that demand (as measured by trading volume) is falling off.

3. Senior corporate officers are net sellers, not buyers. This inside selling is inconsistent with a real bull run.

Here at Notes we have repeatedly stated that there has been money to be made in the recent upswing but that investors better be nimble to avoid the inevitable bull trap. We repeat this warning again today. If you are investing in equities, keep a close eye on events. Right now, you’re money is sitting in dangerous quicksand.

The beginning of the end for the stock market rally is finally here, says Payout Trader editor and technical analyst Charles Delvalle. Charles has been predicting a sell-off for quite some time. Here’s what he has to say on the subject:

After staying above the 20-day moving average since March 12, the Dow finally broke under it on June 16. Four days later, the Dow is trying desperately to stay above its 50-day moving average.

This signals an end to the shocking display of strength the market has shown in recent months.

Typically market bottoms are not V-shaped. They are usually W-shaped or form a reverse head-and-shoulders pattern. For example, after the last bear market the Dow formed a reverse head-and-shoulders pattern before signaling the start of the following multi-year bull run.

Let’s be clear. The “green shoots” hysteria in the mainstream media was designed to boost consumer and investor optimism and to send stocks higher. (Remember, the mainstream media needs large corporations – their advertisers – to succeed as much as Washington does.) The “green shoots” rarely indicated that the economy was improving. More often than not, they simply signaled that things were getting worse more slowly.

For readers taken in by the “green shoots” meme, it may surprise you that the Fed’s recent Flow of Funds report – which tracks the country’s financial flows – shows that credit conditions actually got worse in the first quarter of 2009.

As underground investor Dr Martin Weiss points out, “This directly contradicts Washington’s thesis that the government’s TARP program and the Fed’s massive rescue efforts began to have an impact early in the year.”

Weiss, of MoneyAndMarkets.com, says, “ The credit market shutdown actually gained tremendous momentum in the first quarter. And although it’s natural to expect some temporary stabilization from the government’s massive interventions, the first quarter was SO bad, it’s impossible for me to imagine any scenario in which the crisis could be declared ‘over.’”

Here are the facts Weiss has compiled about credit conditions in Q1 2009:

1. We witnessed one of the biggest collapses of all time in “open market paper” – mostly short-term credit provided to finance mortgages, auto loans, and other businesses. Instead of growing as it had in almost every prior quarter in history, it collapsed at the annual rate of $662.5 billion.

2. Bank lending went into the toilet. Even in the fourth quarter, when the meltdown struck, banks were still growing their loan portfolios at an annual pace of $839.7 billion. But in the first quarter, they did far more than just cut back on new lending. They actually took in loan repayments (or called in existing loans at a much faster pace than they extended new ones! They literally pulled out of the credit markets at the astonishing pace of $856.4 billion per year, their biggest cutback of all time.

3. Meanwhile, nonbank lenders pulled out at the annual rate of $468 billion, also the worst on record.

4. Mortgage lenders  pulled out for a third straight month. (Their worst on record was in the prior quarter.)

5. And consumers  were shoved out of the market for credit at the annual pace of $90.7 billion, the worst on record.

6. The ONLY major player still borrowing money in big amounts was the United States Treasury Department , sopping up $1,442.8 billion of the credit available – and leaving LESS than nothing for the private sector as a whole.

This is all very bad news indeed for the economy. And if it’s been reported in the mainstream media, we have yet to see it.