Want to know what’s going to happen to the stock market?

Watch the energy stocks. They haven’t been going up in recent weeks. Instead, they’ve been going down. And, in some cases, pretty sharply (10% to 15%).

Compared to the rest of the market, that isn’t awful. But crude continues to hit record highs. Natural gas and the distillates are still rising.

It’s a bad, bad sign when the stocks that engage in the exploration of these products don’t follow suit. They will be posting tremendous quarterly numbers in three weeks yet investors aren’t seeing any value in the stocks.

While some of them have doubled or tripled in the last year, compared to earnings, they are trading at fairly cheap valuations.

Anadarko Petroleum (APC) is trading at 13.87 times trailing earnings (those earnings from the last 12 months.)

Stone Energy (SGY) is trading at 7.55 times earnings.

Plains Exploration (PXP) is at 21 times earnings.

Cimarex Energy (XEC) is trading at 12.52 times earnings.

Again, these are all trailing earnings. These companies are going to earn gobs of money in the second quarter and, so far, in the third. I don’t see a bubble in any of these stocks.

What does this mean for the greater market?

The bear is taking hold now. In true bear markets, even the high fliers fall back down to earth. There is nowhere to hide.

For the last year, investors could be in energy and the metals and get a decent return.

Those plays appear to be going away. Now what?

Stay tuned.

It was a late night for me watching election coverage so I’m taking a break on posting about the economy and your investments today.

But, as a heads up, the energy story has shifted from crude to natural gas.

Natural gas is up 63% for the year- a far bigger gain than what crude, which is allegedly a bubble, has tacked on so far this year.

(As an aside, if crude is a “bubble” because of its rise- then what is natural gas? A mega-bubble?)

There are real supply and demand issues with natural gas and prices continue to move higher.

What this means for consumers is higher gas bills to pay for that air conditioning all summer.

How can you invest in it?

The crude explorers are also natural gas explorers. The exploration companies will get double the gifts from Santa this quarter. As an investor, this kind of earnings scenario is very attractive.

And watch the weather. We have entered into hurricane season. Any kind of weather threat in the Gulf of Mexico will certainly push up crude, but also natural gas, prices.

Could we see a big surge of truck drivers heading to Mexico for cheap diesel?

Diesel is even more expensive than regular unleaded gasoline right now. There is a supply shortage worldwide in diesel.

But in Mexico, where the government subsidizes diesel fuel, the price is at least 50% cheaper than in the United States.

CBS Evening News recently talked to one truck transportation business owner who decided to drive three hours from Phoenix to Mexico just to buy diesel:

When Angelo learned that diesel in Mexico is half the Arizona price, he built a large tank to fit into his truck.

“So 11 inches of the bed have been retrofitted to be a fuel tank?” Doane said.

“To be a fuel tank for the truck,” Angelo said.

And headed south nearly three hours just to fill up.

After they crossed the border into Mexico … diesel in Nogales was selling for about $2 a gallon. The Mexican government owns the stations and controls the prices.

“This is quite a trip,” Doane said. “Is it worth it?”

“For 200 gallons,” Angelo said. “Yeah, just saved myself $400.”

But getting back over the border is stressful, with hours of questions, paperwork, and taxes to pay.

“It feels like I’m smuggling marijuana back into the states and I’m just bringing diesel back,” Angelo said.

This business owner, who has run his trucking company for 40 years, believes that the sky-high gas prices may put him out of business. He has already run through a chunk of his savings as fuel costs have soared.

But how many can do what he did? Going across the border is a pain- as he relates. It’s not like you’re driving from Illinois to Indiana to fill up (which many Chicagoans have done over the years as gasoline in Indiana has historically been cheaper than on the Illinois side.)

As he indicated- there are taxes to be paid, papers to be filled out and border officials to talk to.

Many countries are subsidizing the energy costs- including China- in order to give an edge to its businesses and curb inflationary pressures.

But it tells you how desperate some business owners are. Their margins are completely crushed by energy costs. Some will not survive. Others will try and pass along the energy increases to their customers.

That means we all will pay more for our goods.

How far would you go to save money on fuel?

That is the quote from the CFO of small energy exploration company Cimarex (XEC) during their first quarter conference call earlier this month.

He was talking mainly about the profits the company is going to make in the second quarter and beyond, after reporting a record profit in the first quarter, based on $110 to $120 a barrel oil.

Prices averaged about $95 a barrel for the explorers in the first quarter.

Natural gas has also spiked sharply higher.

It’s Christmas in the springtime for the explorers.

Big Oil is being dragged up to Capitol Hill, again, to “explain” its record profits, all the while the small explorers are laughing all the way to the bank. Apache (APA) has made $1 billion in profit each of the last two quarters. That’s pure cash flow.

It will end sometime, of course, as crude oil prices pull back. But in the meantime, it’s nice to be Cimarex.

“You ain’t seen nothing yet.”

Indeed.