Graphene 3D Lab Stock Could Soar 200% and More

Graphene 3D Labs (GPHBF) makes graphene-enhanced materials for 3D printing applications. The company develops graphene nanocomposites and other materials to enhance electrical and thermal conductivity, as well as mechanical strength. Its materials are used for fused filament fabrication, as well as the design, manufacture, and marketing of three-dimensional printers and products worldwide for customers in the aerospace and automotive industries, manufacturers of medical prosthetics, and the military.

Graphene was first discovered in 2003 and is what many call a “magic substance”. Graphene is 100 times stronger than steel and conducts electricity. This material would enable other companies to eventually purchase it as filament and use it to 3D print electronics.

Graphene 3D Lab stock is a high risk, high reward play. The company just announced a day ago, on January 29, 2015, that it has assembled an industrial scale extruder line that can mass produce up to 10 kg per hour of 3D printer filament. The company writes, “The installation of an industrial-scale extruder in Q1 of 2015 is in line with the milestones established in the Company’s business plan. Sales of conductive graphene filament are expected to begin before the end of the first quarter of 2015.” This is excellent news for the company, as a revenue stream will soon be in place. They expect sales of their conductive graphene nanocomposite filament to begin before the end of March, and such sales should be reflected in their first quarter financial report.

Graphene 3D Lab Stock Chart

In about 2 seconds you are going to see what I absolutely love about the Graphene 3D Lab stock chart.

What a beautiful candle over candle reversal on a high volume buy side surge. It just broke above its pivot level at $0.798 today. I don’t see this as a quick 5% to 10% swing trade. This is more of a longer term investment unless it spikes up too fast on us.

Disclosure: I just bought Graphene 3D Lab stock (GPHBF) in my personal trading account. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Globalstar Stock and FAA Aircraft Tracking by 2020

Globalstar (GSAT) provides mobile voice and data communications services through satellite. Globalstar distributes its products through independent agents, dealers, and resellers, as well as independent gateway operators. It operates approximately 34 in-orbit satellites and 25 ground stations.

I believe Globalstar stock could soar if their technology is chosen as one of the mandated technologies in all aircraft by the Feds.

Globalstar Stock and Aircraft Tracking by 2020 Catalyst

Airliners disappearing off radar over the ocean are about to be a thing of the past. The FAA has required that all U.S. airliners be equipped with real-time tracking systems by 2020 as it transitions from a radar-based air traffic control system to one based on satellite technology.

Automatic Dependent Surveillance-Broadcast (ADS-B) is the leading technology for real-time tracking of airliners. More than 600 ADS-B enabled ground stations have already been deployed nationwide. The problem is tracking over the ocean when airliners are over the horizon from ADS-B ground stations. Companies like Globalstar have the solution.

Globalstar is pushing for adoption of “space-based” ADS-B which would send the signal up to a satellite network, as well as down. This will allow for continuous global monitoring of planes regardless of location.

Globalstar is already pushing their ADS-B Link Augmentation System (ALAS) technology through the government certification process. It expects to have its ADS-B technology certified by the Feds in the second half of 2015. You can read about Globalstar’s ADS-B solution here.

Globalstar Stock Fundametal Analysis

Globalstar stock is not pretty. There is a reason this is a $2.49 penny stock. It has no P/E and its P/S is lofty 24.23 which suggests the stock is overvalued in regards to the amount of sales it does. In my opinion, Globalstar appears to be unable to meet bills that are either past due or will come due over the next 90 days. It is facing an immediate liquidity crisis which can have a substantial adverse impact on its share value. The company is inadequately financed to execute any business plan and in a dire need of additional funding. Given its weak position, this funding will most likely have a substantially adverse impact on existing shareholders in the form of share dilution. Globalstar has 855.52 million shares outstanding and has issued more shares every year for the last 5 years. The company has at least twice more total liabilities than equity and is therefore highly leveraged.

Globalstar Stock Chart

Again, not a pretty chart. Globalstar stock trades below both its 50 and 200 day moving averages. The 50 day moving average crossed below the 200 day moving average back in November. I can’t find much I like about this chart other than it appears to be consolidating on very low volume.

Disclosure: I do not hold any position in any stock mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Oil Price Drop Impact on Economy and World

The rapid oil price drop has created negative ripple effects that are beginning to spread across the U.S. economy and world.

Trying to quantify all the negative effects of the oil price drop before they happen is virtually impossible to do. It would require a super-computer simulation on an order of complexity that is beyond most of our grasps. I’m sure the Federal Reserve has access to such a computer model but most traders do not. However, there are some educated guesses we can make based on historical data and trends currently developing.

Oil Price Drop Impact on Economy: Pushes State Budgets in the Red

About 40 states derive a large percentage of their income from energy related business. Here are the top 10 states with the most income coming from the energy sector:

1. North Dakota
2. Wyoming
3. Alaska
4. Oklahoma
5. New Mexico
6. Colorado
7. Montana
8. Texas
9. Kansas
10. Utah

In oil dependent States, coffers are dwindling at an alarming rate. With huge holes blown into State budgets, State’s will have to cut public services in 2015. For example, Alaska is a whopping -$3.5 billion in the red because of the oil price drop. Alaska will likely be making cuts to public schools.

Oil Price Drop Impact on Economy: In Small Counties Across the Oil-Belt, Oil Price Drop Raises the Risk of Bankruptcy

We could see a wave of bankruptcies from small counties across the oil-belt. For example, a whopping 50 percent of the jobs in Uintah County, Utah, could be lost from the crash in the price of oil.

Oil Price Drop Impact on Economy: Cities Across the Oil-Belt, the Risk of Default on Municipal Bonds Is Higher

I don’t want to pull a Meridith Whitney here but the risk of default by cities on municipal bonds has gone up across America. The oil price drop is negative for some municipal issuers because of a potential decline in employment and revenues. Bondholders can be negatively impacted because shrinking revenue leaves less money to meet debt payments.

Many cities are still trying to recover from the Great Recession. The oil price drop could be the final straw that pushes these cities into default and bankruptcy.

Oil Price Drop Impact on Economy: Sovereign Wealth Funds, Oil Price Drop is a Margin Call As They Sell Everything To Meet Margin Requirements

Sovereign wealth funds hold more than $5 trillion in assets. A stunning 6 out of the 10 largest sovereign wealth funds in the world are oil based funds. Energy exporting countries hurt from the oil price drop are being forced to draw down their sovereign wealth funds. This has created selling pressure in stock, bond, and property markets worldwide.

Oil Price Drop Impact on Economy In Small Countries

In many parts of the world, oil is the only source of income that a country has. The drop in the price of oil will create more instability as people take to the streets.

Oil Price Drop Impact on the Euro Zone

The oil crash has caused runaway deflation across the euro zone. If Greek elections bring in a new government that wants concessions from euro zone members, Germany wants Greece out of the euro zone. The threat of deflation has gotten so scary that Germany has its own problems to deal with and won’t entertain Greek drama.

Oil Price Drop Impact on Russian Economy

Russia appealed for calm among its citizens last week as the crash in the price of oil forced it to make big cuts to its budget. Russia has vast gold reserves. Russia is not selling its gold. Instead, it’s dumping its U.S. Treasury bonds.

The drop in the price of oil has forced Russia to raise rates to hold up the Russian ruble. Inflation could hit an annual rate of 17% by spring.

Oil Price Drop Impact on Economy: CPI

The CPI report showed that consumer price inflation went negative in December, falling -0.4%. This is a signal that more disinflation has hit the U.S. economy. Negative inflation, or disinflation, is the opposite of what the Federal Reserve has been trying to do for years. The Fed wants inflation at +2%. Inflation is moving in exactly the opposite direction.

Oil Price Drop Impact on Economy CPI

Below is an excerpt from the weekly Saturday show that airs on YouTube where I discuss the ripple effects caused by the oil price drop.

Financial Select Sector SPDR Plunge Could Make You Rich

Financial Select Sector SPDR Fund (XLF) is an exchange-traded fund. The Fund’s objective is to provide investment results that, before expenses, correspond to the performance of The Financial Select Sector. The Index includes financial services firms whose business’ range from investment management to commercial and business banking.

Bears are targeting the Financial Select Sector SPDR (XLF) ETF.

Shrinking Interest Rate Spread

The yield curve is flattening at an alarming rate.

I maxed out the trail setting (grey lines) so you can see historically what has happened on the long end of the yield curve. Yikes! The yield curve is still rated as “normal” but look at how the spread between short term and longer term yields as drastically shrunk as of recent.

Banks borrow money at short term rates from the Fed or each other, loan it out long term, and make money off the spread. But it’s not just banks. All sorts of financial firms and instruments such as REITs profit off the difference between short term and long term yields.

With the flattening yield curve, it’s no wonder Bears are targeting various financial firms and their financial instruments like the Financial Select Sector SPDR Fund (XLF) ETF.

Financial Select Sector SPDR Fund (XLF) Chart

This is a double top reversal. It has broken below the 50 day moving average. It has just taken out the pivot level at $23.42. It has done all this on rising sell-side volume. Whether the 200 day moving average holds at $23.07 will tell us a lot. Just below the 200 day moving average is the 61.8% Fibonacci retracement support level at $22.90. Breaks below the 200 day moving average and the 61.8% retracement level would signal that the pullback in XLF is more serious than just a normal pullback within a larger uptrend. A break of both these levels would signal the start of a new downtrend.

Shorting the Financial Select Sector SPDR (XLF)

I like running with the Bears on shorting financials. A great way to short financials is the Daily Financial Bear 3x Shares (FAZ).

Financial Bear 3x Shares (FAZ) Chart

FAZ just broke above its pivot level of $14.32 on rising volume. It also has broken above the 50 day moving average.

This is a very risky 3x leveraged ETF. The normal +5% to +10% profit target for swing trades applies. However, if you think the yield curve is going to go inverted and that we will go into a Bear market, a longer term hold in FAZ could make you rich. Personally, I gave up on pipe dreams of becoming rich in one trade along time ago. I would play the +5% to +10% target then get out quickly. Why? To prevent an inverted yield curve, the Federal Reserve would probably step in to save their banking buddies with another QE like program.

Disclosure: I do not hold any position in any stock mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Deflation News Strikes Fear and What You Don’t Know

Fears of disinflation becoming a vicious deflationary cycle spread across Wall Street today. Deflation news spread fear and volatility across markets.

At market open, SPY did a gap up open and then ripped higher. Just after 10:00 AM on January 13, 2015, SPY was up +1.4% from the previous day’s close. Just 10 minutes later, SPY started selling off. It fell -2.4% by 2:20 PM.

The popping energy bubble has ignited fears that we are in a disinflation plunge that is quickly becoming a deflationary environment.

Deflation News Catalyst is the Rising U.S. Dollar

Peter Schiff agrees with me that the rising U.S. dollar, because the Fed ended QE, is helping cause the price of oil to crash, and is putting a downward pressure on stocks.

Deflation News Ripples Through Economy and CRB Index

The -0.2 plunge in average hourly earnings from the January 9, 2015 Employment Situation Report really unnerved a lot of traders. But what is really freaking everybody out is the CRB index. The CRB index has predicted every inflationary/deflationary cycle since 1967.

Most traders know that the Federal Reserve has been battling disinflation since 2011. The Fed has repeatedly pumped money into the economy since 2011 in order to prevent the economy from going into a deflationary spiral. With the energy bubble popping, the CRB index has plunged in a way only seen during the onset of major Bear markets.

CNBC had Steve Massocca from Wedbush Equity Management on today. Check out what Mr. Massocca had to say when asked if the drop in the price of oil justified today’s sell-off.

Steve Massocca mentioned the drop in the price of copper. Traders watch copper as a kind of barometer on the health of the global economy. The reason copper is such a bellwether indicator is that it is used in so many different industries and products.

The popping of the energy bubble and the fear of deflation is clearly scaring traders.

Deflation News and Central Banks

It’s possible that we could see the Fed not only NOT raise rates, but maybe even start up another round of QE if deflation begins overwhelming markets.

There are multiple deflation news hot spots you should be tracking right now. They are: rising U.S. dollar, energy bubble popping (includes falling price of oil, oil rigs closing, energy sector layoffs, energy sector bankruptcies, and global margin debt that was financed by oil), falling CRB index, falling price of copper, falling wages, and Central Bank action from our biggest trading partners and if they are devaluing their currencies.

The energy bubble popping was the worst possible thing that could have happened in terms of helping the Fed fight disinflation.

The longer that we allow Japan and Europe to devalue their currencies, without devaluing our own, the more deflation we absorb from those countries. Remember, the rising U.S. dollar is deflationary. A falling U.S. dollar is inflationary. The Fed prints money and devalues the dollar to create inflation (like Japan is doing right now). The Fed raises rates to create disinflation and soak up excess U.S. dollars. As the dollar rises in value, all good and services, and even the stock market, goes down (i.e. it takes fewer dollars to buy the same amount of goods).

Gordmans Stores Stock Does Downtrend Channel Breakout

Gordmans Stores (GMAN) is a department store chain operating under the name Gordmans. It sells apparel, footwear, and home fashions products, as well as accessories. The company sells apparels, including young men’s, men’s, juniors’, women’s, team, plus sizes, maternity, and children’s clothing. Accessories include fragrances, intimate apparel, handbags, sunglasses, fashion jewelry, leg wear, and sleepwear. It also sells home fashion products like wall art, photo frames, accent furniture, accent lighting, candles, ceramics, vases, seasonal dcor, floral and garden, gourmet food and candy, toys, luggage, pet accessories, house wares, decorative pillows, fashion rugs, and bedding and bath products.

The P/S of 0.10 suggests Gordmans Stores stock appears to be currently undervalued in relation to the amount of sales the company is doing. The P/B of 1.84 suggests the company’s market value is attractively priced in relation to the assets it has.

Why Gordmans Stores Stock Is So Cheap

There’s a reason Gordmans Stores stock is so cheap and I’m not going to sugarcoat this folks. In my opinion, the company appears to be unable to meet bills that are either past due or will come due over the next 90 days. It is facing an immediate liquidity crisis which can have a substantial adverse impact on its share value. The company is inadequately financed and requires additional capital. This funding will most likely be dilutive to shareholders and may cause the share price to decline. The company’s total liabilities exceed its equity by at least 70%.

Gordmans Stores Stock Chart

Gordman Stores Stock Chart

Gordmans Stores stock has really been beaten down. It traded at $8 in January of 2014. It fell all the way to $2.45 on December 15, 2014, a whopping loss of -70%.

Notice that Gordmans Stores stock did a double bottom in December. It has since ripped off the bottom by more than +38%. It has just done a downtrend channel breakout. It has also broken above the pivot level of $3.35.

Disclosure: I do not hold any position in any stock mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Employment Cost Index Becomes Stock Traders Focus

Like most traders, you probably have never heard of the Employment Cost Index. There’s a good reason for that. This is not an economic indicator that usually moves markets. Here’s why that has changed.

The Employment Situation Report released on January 9, 2015, showed a plunge in average hourly earnings. The consensus for the month over month change was 0% to 0.3%. The actual number was a surprising -0.2%.

Employment Cost Index Hourly Earnings

Higher wage jobs are being lost across the entire energy sector. The price of oil and the energy sector is the heart of the economic circulatory system. Why did hourly earnings plunge last month? Probably because of the energy bubble popping but we need more data to know for sure. Enter stage right: Employment Cost Index.

What is the Employment Cost Index?

The Employment Cost Index is a measure of total employee compensation costs, including wages and salaries as well as benefits. The Employment Cost Index (ECI) is the broadest measure of labor costs.

Hypocrite Hippie.
The Employment Cost Index (ECI) is a way to analyze wage trends and the risk of wage inflation or deflation. Wage inflation happens when economic activity is booming and the demand for labor is rising rapidly. Wage disinflation happens when economic activity is falling and the demand for labor is dropping rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down.

By tracking the Employment Cost Index (ECI), traders can gain a sense of whether businesses will feel the need to raise prices. If wage inflation occurs, it’s a good bet that the Fed will raise interest rates. If wage disinflation occurs, then I think the Fed puts off raising interest rates for fear of putting the economy into a deflationary death-spiral.

The ECI is published quarterly. The 2015 release schedule for the ECI is: 1/30, 4/30, 7/31, and 10/30.

Will the Employment Cost Index Confirm Wages Are Dropping?

Lower oil prices are starting to show up in non-oil price items like core inflation. The drop in hourly earnings is a sign of disinflation. Remember, in a deflationary environment, employers are more reluctant to give out raises.

Traders will focus on the January 30, 2015 release of the Employment Cost Index (ECI) to see if that confirms the decline in wages from December’s Employment Situation report. The ECI will tell us if we should worry about declining wages across the broader economy.

Margin Debt is Where Oil Could Crash Stock Market

Margin debt is the gateway through which the rapid drop in the price of oil can crash the stock market.

Margin debt fuels stock purchases. For years, margin debt has been rising. Today it sits at sky high levels never seen before.

We saw sovereign wealth funds order institutional traders to sell some of their equities after OPEC decided to not cut production in November 2014. That’s one form of a margin call. But rather than just being a margin call on a few traders, it’s a global margin call that impacts markets around the world.

If you trade on margin, then you know that when you buy certain stocks, your online broker will extend you margin buying power. If it’s a risky small cap, you won’t be extended any margin when you buy a stock. Early last year, if you bought a big blue chip oil company, you were extended 50% margin. So, if you bought $10,000 worth of stock in a big oil company, your margin balance was increased by $5,000. That’s another $5,000 you can use to buy even more stocks. Depending on your total account balance, you are charged anywhere between 3% and 8% interest when you buy on margin. If you make anything above that interest rate in a year’s time, you get to keep the profits. It’s almost like free money to invest with, until the market goes down.

When the price of oil crashed, the margin rate on many stocks dropped. No longer would your brokerage firm extend you 50% margin on certain big oil companies. But it gets worse. If you already borrowed money on margin, and your brokerage firm reduced the margin level of a stock you hold, a margin call went out and you were forced to either put more money into your brokerage account or sell some of the stock you bought with that borrowed money to reduce your margin level.

Folks, reduced margin is where I think the crash in the price of oil has the biggest potential to crash the stock market.

Margin Debt Chart

As you can see, every big stock market crash over the last 15+ years was led by a plunge in the margin debt level.

Margin Debt Versus Price of Oil Chart

Notice that when the price of oil began to crash in August of 2014, margin debt began rolling over as well. Notice that none of this is yet reflected in the S&P 500 because margin debt is still being used at very high levels. However, if margin debt levels keep falling, they will impact the S&P 500 as history has shown.

Below is an excerpt from the January 3, 2015 show where I discuss margin debt and the drop in the price of oil: