If two of these three trends don't take place, neither will a market rally.
 

Bank of America (NYSE: BAC) missed earnings estimates badly, and tech behemoth IBM (NYSE: IBM) came in light on sales.

The market finished higher yesterday despite a bearish open. Volume was low for a second session in a row, which is unusual given the huge price move over the past three days.

The market lost ground again last week. Despite early optimism from Europe and a rise in bank stocks, the bulls could not muster any meaningful rally. And the bears quickly resumed the selling pressure, defended 1175 on SPX, and dragged the market back to within 3% of this year's low.

Volume was also high in the decline, which indicates that there still is a large base of investors who are more than willing to sell at lower prices.

The market continued its incredible rally higher on Friday. Volume increased as the bulls tacked on another gain and the SPX finished 5% higher for the week. More importantly, SPX was able to rally past 1175 again.

After the burst past 1175, buyers wasted no time and took the SPX all the way up to 1220 resistance. But much like in the past, 1220 could not be broken.

Over the past month or two months I have stayed bullish, but at the same time I refused to believe SPX could rally past 1250 without government assistance.

Before I get into my regular market commentary, I'd like to introduce someone to you.

If you're in the market for more than a few weeks - at the very most - you're probably wasting your time. You're just not using market movements effectively. And you know that's how I make profits with TradeMaster.

Enter someone you may be familiar with: Andy Crowder.

The market was slammed yet another time yesterday. Although unlike Thursday and Friday, the indices recovered into the close.

Once again financials led the charge lower and the big banks like JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were down 3%. Energy and technology components were also hurt and stocks like Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) were down 1% and Exxon Mobil (NYSE:XOM), Apache (NYSE:APA), Continental Resources (NYSE:CLR), which we're short, and Halliburton (NYSE:HAL) were down 2%.

The market slowly moved higher yesterday. The indices actually started deep in the red. But a midmorning ride down to 1197 stabilized SPX and it rose from there to eventually hit 1220 resistance by late afternoon.

The SPX slid nearly a percent after it tagged 1220 resistance, and the decline occurred in about five minutes. While the bulls were not able to overcome 1220 yesterday, they likely established 1197 as a support zone again following the morning bounce.

The market blasted higher yesterday. Volume soared as the indices climbed over 3% in a persistent rise. The accumulation was great as technology led the charge higher. Additionally, the indices were able to put in a big day without the help of a falling dollar which was a positive sign of market strength.

Yesterday I wrote about how the bulls needed a big day and also how I thought the bulls were going to get it. The SPX was near a sturdy support zone, and a bottoming pattern was in place. All the bulls needed to do was pump the market higher and then SPX would be on its way to 1197.

The market was positioned to collapse again yesterday. The indices overseas were decimated overnight and the dollar was in full rally mode while the euro crashed. But instead of another decline, the bulls stood firm for most of the session and prevented the bears from another big day. Sure, the indices were down yesterday but the pain could have been worse.

I continue to view the action of the past couple days as consolidation. And until 1301 is taken by the bears I firmly expect new highs in all market indices.

Yesterday the minutes of the last FOMC meeting were released and QE3 was on the agenda. While nothing formal was announced by the FOMC, the group claimed to be open to another round of easing if warranted by slow economic growth and mild employment growth.

The market consolidated last week, as expected, although I would have preferred a deeper pull back. The indices rallied hard into the first week of July, and rebounded a little too far and too fast.

The market has a big week, and month, ahead of it. I would have expected the indices to pull-back more ahead of this week, but the time for consolidation is over.

Investors must decide whether the market will break-out to fresh highs, or tank. The market consolidated last week, as expected, although I would have preferred a deeper pull back.

The indices rallied hard into the first week of July, and rebounded a little too far and too fast. The market has a big week, and month, ahead of it. I would have expected the indices to pull-back more ahead of this week, but the time for consolidation is over.

Twelve years ago, at the infancy of the current bull market in gold, a small group of folks started buying up gold and gold securities.

They didn’t ring a bell or tell their friends. They probably felt a little foolish doing so. They might have felt a little crazy.

Gold had been in a two-decade bear market.

Today, there’s a commodity that’s commonly used, extremely cheap and arguably in a 50 or 60 year bear market.

It’s a commodity that people probably don’t even think about as very investment-worthy – but it’s completely vital to the modern world. Significantly more important than gold even.

And I’m going to tell you how to invest in three companies involved in this commodity today that should see strong gains in the coming years, as well as solid dividends in the meantime.

Is buying now too early? I can’t say for sure. But what I can say is that a bull market in this commodity is as inevitable as the tides. Perhaps literally so…

Today I’m going to talk about some very compelling natural gas investments. My colleague Tyler Laundon has asked me to mention an excellent new research report that he wrote on small, growth-oriented American natural gas companies.  You can read about this report by clicking here now.

Oil might be hugely important to world energy needs, but it’s not the only game in town. If oil is the NFL (huge, popular, unstoppable and pervasive and vital in the United States) then natural gas is soccer (small, underutilized, unloved, but pervasive and vital in Europe).

And say what you will about hydraulic fracking and other natural gas drilling techniques and how they may or may not poison the water table or cause a rash of flipper babies or cancer or whatever else the environmentalists may have you believe.

The fact is, new nat-gas drilling techniques are bringing a literal ocean of new energy resource to the markets. You’ve probably heard about massive supplies of gas in places like the Marcellus shale of Pennsylvania and New York. Or the Barnett shale in Texas. The Haynesville shale of Louisiana. The Bakken shale. The Gammon shale. The Green River shale. The Williston, Anadarko and Michigan basins. The United States now sits on more readily available, cheap natural gas supply than any other country besides Russia.

Right now, oil and natural gas prices are stretched to their limits.

Rarely before in history has oil been so expensive while at the same time, natural gas prices so cheap.

You can see this price differential in effect by looking at this chart, which divides the price of one barrel of oil by the price of one million british thermal units (mmbtu) of natural gas:

Today I’m going to discuss three main reasons why natural gas prices (in the United States) haven’t participated in the commodity boom of 2010.

The first reason is that natural gas prices are loosely tied to oil prices.

Yes, oil prices rose over the past year, but only by about 10%. In order for oil prices to significantly buoy natural gas prices, we’ll need to see another huge ramp up like we did in the summer of 2008. Those higher oil prices (above the $100 mark - as an estimate) bolster demand for natural gas.

Why? Well, natural gas is an input in some oil production. Natural gas is pumped into oil wells in order to sustain pressure to bring oil out of the ground. It’s used to power machinery and produce oil in non-conventional oil production.

Yesterday I discussed the overwhelming importance of oil and its implications for your investments.

My most important advice in yesterday's issue was buried down at the bottom, so you might have missed it. Here it is to recap:

"if I can leave you with one thing to keep in mind, it's to remember the importance of oil - even for non-commodity investments. You need to look at all of your investments, from stocks even down to bonds and savings accounts, and think about how oil price fluctuations could affect the bottom line of the underlying assets and businesses you're invested in."

I also promised that I would look into some specific oil investments to buy under the assumption that the recession has resumed or is on the horizon.

During a recession, oil prices tend to sag due to decreased demand for oil, which doesn't usually bode well for most types of oil companies.

Right now, I'm bullish on many things - but lead might be the most contrarian commodity I'm bullish on.

That's why it pays to be a commodity investor, because we're still ahead of the crowds; we're contrarian.

Most, if not all investors, are heavily into broad index mutual funds. They've been buying the market, and hoping that it will turn around.

I'll keep my 'hope' for my favorite sports teams (go Philadelphia!), and instead use my brain to find investments that are forward looking. What has worked in the past might again work in the future - but not simply because it worked in the past.

And since we're coming up on 4^th of July weekend, I'm looking for patriotic investments, like lead.

Another late day sell-off has left the S&P 500 at 1,030. That's below the February 2010 lows. In fact, we are now looking at the support level established in August and October 2009.

I think we've pretty well established what investors are pricing in to stocks. There's the slowdown in China, austerity plans in Europe that are likely to slow growth there, and then there's the U.S. economy. Unemployment, housing, earnings, and new banking regulations are all weighing on stock prices.

Let's also not forget that yesterday was the last day of the second quarter.

Last week, I began a column on small-cap funds, noting that while they are not immune to a market decline, they do offer the added safety of diversification and professional management.

This week we continue our look with a trio funds that add another element of “value” during a volatile market period. All three – from the WisdomTree family of exchange-traded funds – focus on dividend-paying stocks.

Jim Lowell looks abroad and rates WisdomTree International SmallCap Dividend Fund (NYSE: DLS) a “buy.”

The editor of Forbes ETF Advisor says, “Show me the money; or better yet, show me the jobs! Where jobs are being created, consumers are being minted. Where consumers are being minted, money is being spent. Where money is being spent revenue is being generated. Where revenue is being generated earnings can arise.”

This fund, notes Lowell, focuses on the “least well followed and most inefficiently traded” capitalization range in the established foreign markets of Europe and Japan –   small caps.

He explains, “And just as U.S. small cap stocks have been the best long-term investment over the past 30 years here, born on the burgeoning middle/consumer class that holds our economy’s fate in its spending hands, the re-emerging middle class in Europe, and the emerging middle class in Asia are doing likewise.”