Friday, December 12, 2008

The Kirk Report

The Kirk Report

12 More Days

Posted: 12 Dec 2008 04:00 PM CST

The "we're fine until 09" sentiment remains intact ahead of next week's Fed meeting and options expiration. While it looked ugly this morning, the market resisted the urge to sell and we closed up higher on the day.

S&P 500: This Week

For the week, the S&P 500 dropped -0.35%, Dow -0.25% while weekly gains could be found in both the Nasdaq +2.40%, and the Russell 2000 +1.4%. Given the plethora of bad news and focus on bailouts, it could have far been worse. The biggest winners this week were gold (GDX), steel (SLX), coal (KOL), energy (RYE), and basic materials (UYM) as the reflation trade took hold. No doubt, a lot of people were also encouraged to see the rally in semiconductors as well.

In some ways, it is difficult to believe we have just 12 more trading days left of 2008 and in other ways this year has been a truly long one. No matter your perspective, I'll be back next week (although with fewer posts than normal) as I work on wrapping up the year (i.e. prepare taxes (ugh), get the new workstation up and running, and work on several projects for the website that I haven't made time for until now). See you next week!

Mailbag

Posted: 12 Dec 2008 12:21 PM CST

Mailbag
It's time to open up the old mailbag. For this edition, I will cover the following:
  • A Grace Period For Learning How To Trade

  • Risk Management Will Offset Low Win/Lose Ratio

  • Developing A Business Plan For Trading

  • Entertaining A Short Treasuries Trade

  • Chartered Financial Analyst (CFA) Designation

  • Trading Mindset Regarding Current Positions

  • Don't Let The Market Control Your Level Of Confidence

  • Bad News Baked In?

  • Close Record Keeping To Spot Near-Term Trends

  • Fear & Doubt Over Lazy Portfolio Strategies

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No Deal

Posted: 12 Dec 2008 08:30 AM CST

No Deal
Good morning. The market is set to provide a good test to the "bad news is already priced in theory" after plans for the bailout of the auto industry fell apart in the Senate amid a dispute over union wages. To add icing to the bears' breakfast cake this morning, Wall Street has another stupid scandal to focus on.

Premarket gainers: EXEL, OZN, SFI, FRX, MATK, ESL, HLX, EQT, VVUS, & DROOY.

Premarket losers: GM, F, LEA, AXL, ZOLT, JCI, WCN, COG, GGP, REXX, ADCT, CBI, MGA, DRYS, CSIQ, JASO, LYG, RBS, BCS, ALU, C, LVS, TRW, BAC, WAT, CIT, CLMS, MT, HBC, UBS, DHR, DB, OCNF, PRGN, ENER, FWLT, FSLR, NVDA, BUCY, MRVL, & UAUA.

Believe it or not, the good news that can be found is from the economy itself. Both the PPI and November retail sales reports were a bit better than anticipated. At 10:AM we have reports on Consumer Sentiment and Business Inventories. And, remember traders will be looking for an even bigger rate cute from the Fed next Tuesday and already there is chatter that the auto firms will get a bailout no matter what, perhaps even through the TARP.

At the moment, premarket futures are indicating a big nasty gap down and we don't have a lot of near-term support to work with other than way back down to last Friday's low around S&P 820. I suspect that with the Fed ahead next week, the market probably will still hold out hope that the news isn't as bad as it seems this morning and that it will be worked out soon. That said, let's let the market be the final judge. No matter what, today's action will tell us something about the conviction of those who are currently long the market and that alone will be helpful as we finish out this year.

Have a great Friday!

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