Wednesday, January 7, 2009

The Kirk Report

The Kirk Report

Lessons From 2008

Posted: 07 Jan 2009 02:03 PM CST

trading lessons

As usual, the annual membership survey has provided some good food for thought. In that survey, one of the questions I asked was: "What would you say is the most important thing you've learned about investing and/or trading in 2008?"

Here are some of the replies I received:

  • Knowledge is better than luck, but luck surely helps

  • Don't try to guess where the market is headed - you'll always be wrong to some degree. Trade what you see not what you want to see

  • Let the market speak before I get in the correct mindset to trade. If I don't, my losses mount

  • Eliminate greed and take my time. Be cool

  • Always limit your downside and don't be afraid to go short

  • Markets do and need corrections

  • Trade in smaller positions when strategies fail to work as they have in the past

  • Don't just think about stop losses - but use them!!!!!!

  • Patience and discipline to stay out of the market if one doesn't have a good idea

  • Always believe the charts

  • Gurus who predict the future about the stock market and particular stocks are no better than me

  • Pay more attention to the technicals

  • Thoroughly understand your own risk tolerance

  • That there is no simple system that will work every time

  • When profits come too easily, it is time to reduce risk

  • I learned to trust myself and follow my own plan

  • Comparing stock market returns from the past 50-100 years bears little insight into the next 10-50-100 years. We live in a completely different world and face unique challenges and unknowns

  • Sometimes the best move is no move

  • You must learn to think for yourself

  • Trends, once established, last much longer than anyone expects

  • Clear entry and exit points before the trade is critical

  • Understand the various scenarios that the market may present you and then plan your actions for each of them. That is preparation, not prediction. Prediction tends to bind you to one point of view because when that doesn't come true, you don't know what to do.

  • I've learned to seek out opinions that challenge my analysis and beliefs and ignore the rest

  • Anything that "can never happen" can happen

  • When the heat is on, you must stick to your plan and obey your trading rules

* This is only part one of five. Many more lessons will be posted at the members' only website.

Jobs & More

Posted: 07 Jan 2009 08:30 AM CST

Good morning. Premarket futures are under pressure following the two reports on the job market.

According to ADP, nonfarm employment fell by -693K from November to December which was far worse than consensus of a loss of -493K. In addition, it was the worst December for layoffs on record according to Challenger Gray & Christmas. Both reports come ahead of Friday's employment report.

In other news, Meredith Whitney warns that banks may have to raise even more capital in 2009, mortgage applications fell -8.2% from a week ago, Obama and House Financial Services' Barney Frank reach an agreement in principle to release the second half of TARP funds, GM says it has enough loans to cover its worst-case forecast, Intel cut its 4Q forecast, Alcoa slashes jobs, and European Central bankers and government officials note the possibility of a prolonged recession.

Premarket gainers: LJPC, ICOG, DXCM, CPY, TSEM, NTCT, BBI, SWKS, IWOV, PLCM, FDO, MON, MYL, KEM, MPG, ES, FDO, FFIV, AKS, KBR, MU, RMBS, CAJ, & HMC.

Premarket losers: SAY, AY, GU, IBN, IXYS, SMSC, AAUK, AA, ZOLT, CHS, CHU, TTM, CTSH, MCHP, ACAS, INFY, ERTS, EGLE, SOLF, DRYS, TITN, TBSI, WYNN, QI, & MEA.

At 10:35 we have the weekly petroleum status report and Thomas Hoenig is scheduled to speak at 1:PM. However, this morning's data on employment will remain front and center and we'll see if that makes much of a difference to the overall bullish tone we've seen in recent days.

The good news is that if the market can digest this data today without too much technical damage (again S&P 900 or above) and lower expectations into Friday, that will at least take some of the risk out of another bad jobs report on Friday since now everyone will probably expect the worst. After all, I doubt those putting money to work recently didn't expect to see more bad news on the jobs front, so it will be interesting to see how much or how little this news pressures the market from a sentiment perspective. Overall, we're still well into overbought territory and choppy action is the most likely scenario in my view, so be selective out there with those entry points as a little patience right now will likely open up better trades in due time.

Have a great day!

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