Monday, October 13, 2008

The Kirk Report

The Kirk Report

Ebb & Flow

Posted: 13 Oct 2008 11:33 AM CDT

Columbus Day

Posted: 13 Oct 2008 08:15 AM CDT

Good morning. Markets are in rally mode following new efforts by governments around the world to ease the credit crisis. Along with loan guarantees between banks through 2009 and the measure to allow governments to buy stock in distressed financial companies in exchange for unlimited amounts of cash is being viewed as a much needed lifeline for the credit markets. Over the weekend, the FDIC seized two more small banks. In addition, Morgan Stanley and Mitsubishi UFJ have reach a new agreement.

In other news, the FASB approved fair-value guidance and a Goldman Sachs analyst, David Kostin, is pounding the table and calling for a year-end rally. Premarket futures indicate a +3% to +5% gap open.

Premarket gainers: MS, NCC, ABK, SFI, AIG, UBS, GNW, TMA, GM, F, IBN, AA, GOLD, APWR, ESLR, MTL, CHDX, SPWRA, RMBS, SOLF, UAUA, MT, LDK, BAC, WB, SOV, C, GS, LVS, ABT, MGM, HERO, MICC, STLD, FITB, ACAS, & SOHU.

Premarket losers: NWY, RBS, NGPC, MIR, CMS, DYN, TSN, EXPE, PHG, GLNG, & VCLK.

Today is Columbus Day and there's nothing on the economic calendar although we do have a number of earnings reports due out both today and the rest of the week as earnings season really picks up speed.

At this point, it would actually be nice to see more pessimism and distrust of any bounce, rather than a surge of sudden optimism and bottom calling but if you are currently long the market to any extent after last week, you probably won't care no matter what. Needless to say, a bounce is only the first step to recovery. Ultimately, we need the market to enter a period of healing backed by a significant improvement in the credit markets in order to form a meaningful bottom that has the potential to last longer than just a few trading days. We're certainly oversold enough to see a double-digit percentage bounce this week, but like usual let's take it one day at a time and let the market itself prove that last week's selling was overdone.

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