From Zero to 286,000 Shares in One Day Flat - Problem Solved

Well, looks like my liquidity worries from Friday about American Liberty Petroleum (OTC:OREO) were a bit unnecessary. This thing's traded almost 300,000 shares today - up from zero for the last several weeks - and the activity is still going strong. The bid/ask spread has closed up nicely too. If you wanted in, it shouldn't have been (or shouldn't be) a problem.

Just as a reminder in case you missed Friday's edition, American Liberty Petroleum is a young junior oil explorer with two phenomenal prospects in Nevada. One of them is Kibby Flat, which is holding potential reserves of 669 million barrels of crude, while the other is Gabbs Valley, which is holding as much as 4 billion (yes, with a 'b) barrels of oil.

I know the numbers sound crazy for a $130 million company; it's nearly a half a trillion bucks worth of oil. It's not as crazy as it sounds when you start to dig into the company and do a little due diligence though.

One of the biggest known reserves in the United States is just a couple hundred miles southwest of there in California, and it's got an estimated 1 billion barrels of oil waiting to be tapped. And, less than a couple hundred miles away in the middle of Nevada you'll find one of the most productive U.S. wells ever - Grant Canyon. It's well exceeded its expected reserves, and is still active to this day. Who knows when it'll actually dry up?

Anyway, the details are academic. I want to take a step back and talk a little philosophy with you, making a point I also made on Friday, and one Bryan Murphy re-made today.

It wasn't the reason for the sudden surge in volume, but the company posted yet-another press release today. No biggie... just a few details on the two properties I talked you about above.

Like I mentioned a couple of days ago, it looks like American Liberty Petroleum is finally starting to think about its stock, which is an indirect sign that it's got something worth telling investors and getting them excited - the third press release in as many weeks, and the only three press releases in years. Something's going on.

In fact, that was the whole reason we told you OREO was being added to the list of Featured Stocks - momentum is building up, organic or not.

I still suspect liquidity could be hot and cold for a while here as American Liberty Petroleum gathers some traders, but the big hurdle's been cleared. There shouldn't be much if any problem getting in or out at reasonable levels if you just have a little patience.

Buckle up, 'cause this one's gonna' be fun.

Now, about this market...

S&P 500 Outlook - Don't Sweat Today

It's been a while since we've had a chance to slice and dice the market, so I'm going to just force myself to do it today. And, in a very Steven Covey-ish way, I'm going to begin with the end in mind and tell you up front I'm still a bull here. Today's pause is neither disruptive, nor surprising.

Just as a reminder, the market jumped nearly 2.0% on Friday, and is still up more than 10% for the last six weeks - that's a lot of weight to carry, and it deserves a break.

Now take a close look at the nearby chart. Yeah we've seen some up and down for the past three weeks, but the bulls have drawn a line in the sand around 1230 that to this day is still holding up as a floor. Today's pullback was halted and reversed at the 20-day moving average line, which has also been a key support area a couple times over the course of this now-intermediate-term rally.

On the flipside...

To really have confidence in this budding bullish effort, the S&P 500 is going to have to clear the 200-day moving average line at 1272. We've seen it poke its head above the 200-day line a couple of times over the past three weeks, but neither effort was permanent - the index was much lower by the next one or two days. The buyers have poured back in after both dips though, so I still have to give the favorable odds to a breakout move here.

Fortunately you won't have to wait too long for that confirming move, since the 200-day average is only 22 points above where we are now.

The only thing that alarms me about the buying we've seen since early October is that it's been a low-volume effort. The selloff days have been low-volume days too though, so this is more of a lack of total market participants than it is a lack of confidence in the uptrend.

If I had to guess (and I do), I'd say we'll either have the breakout or the meltdown started by the end of this week. The market's been stagnant for three weeks now, and the natives are getting restless.

The Best Of the Rest

Not that you don't have enough stuff packed into this edition of the newsletter, but a few other commentaries from the site caught my eye, and I think you'll like them too.

• Nothing complicated - just three stocks dropping technical breakout hints.
• Energy Conversion Devices Inc (NASDAQ: ENER) seems to be following in the same footsteps as Solyndra, and it forces investors to wonder if their illnesses have become an infection for the whole solar panel market. Brian Prescott details the underlying woes here, and what it really means for the likes of Ascent Solar Technologies Inc (NASDAQ: ASTI), Hoku Corporation (NASDAQ: HOKU), and all the rest.
• MLPs in the oil and gas space are looking juicy again, especially when the dividend is double-digits and income is expected to grow by more than 50%. Jonathan Yates has the skinny on this relatively unknown - but high octane - master limited partnership.

That's it for now. Don't forget to check out OREO if you haven't yet. More tomorrow.