Wednesday, January 28, 2009

The Kirk Report

The Kirk Report

Hail Mary

Posted: 28 Jan 2009 04:27 PM CST

The combination of the latest hail mary passes by the government and end-of-the-month portfolio dressing has certainly helped the tape.

S&P 500: 10 Day View

After breaking through the S&P 850 barrier, we briefly tested the S&P 875 level that I talked about last Friday as an important level to watch on any upside foray. In short, a sustained close above that level (and absolutely no retracement below 850) is the first step of many to confirm that this is more than just a temporary end-of-month snapper.

For now, expect traders to continue to push their luck as fading the sentiment extremes (buying oversold & shorting overbought) continues to pay the bills. As you know a large short-squeeze is currently underway in the financials and there are nice profits to still be made there as long as you trail and scale and don't get too greedy with those trades.

While I don't want to rain on today's parade, another day of this kind of upside traction will push us back into overbought territory which makes the risk/reward calculation start to tilt toward more risk than reward just as we finally gather some upside momentum again. No one said this is easy, right? But, we will deal with that one tomorrow.

Schaeffer's Contrarian Stock Screener

Posted: 28 Jan 2009 12:09 PM CST

A member recently suggested I take a look at Schaeffer's Contrarian Stock Screener and I have to admit I've enjoyed playing around with it.

The screener's approach is different than what you'll find in other online tools because you start by picking a sentiment bias first:

Schaeffer's Contrarian Stock Screener

The second step requires you to filter the candidates in order to narrow down the selection (like restricting only to oversold stocks and stocks that trade with minimum price and volume and more):

Schaeffer's Contrarian Stock Screener

The third and final step is to select the indicators you want displayed along with the results (some of these are different than what you'll find in other screeners):

Schaeffer's Contrarian Stock Screener

Then you get the results:

Schaeffer's Contrarian Stock Screener

In this environment I think a stock screener of this nature can be useful. For example, situations where the analysts are uniformly bearish and which have already pounded those stocks to extreme oversold levels have been seeing some interest of late as you already must know from looking through this week's big upside movers. Check it out!

Bad Bank Plan

Posted: 28 Jan 2009 08:30 AM CST

file lotsofbanks1.gif
Good morning. Premarket futures are soaring as details emerge on the new bad bank plan and the $900 billion dollar stimulus package. The financials (especially leveraged financial ETFs like the FAS) are under heavy accumulation in premarket trading.

Premarket gainers: MTB, CTIC, LYG, IRE, RBS, VPRT, FED, AIB, C, BCS, FAS, WFC, ABK, BAC, MI, DB, FITB, STI, UCBH, STT, CIT, VPRT, ZION, CSIQ, DRYS, HOG, ASML, YHOO, UAUA, STLD, CLNE, HCBK, ADBE, CSGS, NVDA, & BIDU.

Premarket losers: ALD, CNB, CENX, RFMD, KMR, LM, TEL, OTTR, NDN, SGEN, BRKL, STU, MOLX, AMLN, PLT, CP, ERY, DV, IOC, SGEN, & PALM.

Today is Fed day and along with more details and inspection over the latest government plans, the market will eagerly await any change (especially improvement) from the Fed's point of view this afternoon. No one expects the Fed to cut rates more, but the policy statement will likely prove to be a market mover.

Needless to say, the trade in play for the day will be focused on the financials and whether we can take out overhead resistance. I expect some choppy action after a big open and look for the dominant trend to take hold (if any) after 10:AM. Have a great day!

Risk-Free Returns

Posted: 27 Jan 2009 11:08 AM CST

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Earnings Avalanche

Posted: 27 Jan 2009 07:57 AM CST

Good morning. Premarket futures are positive following many more earnings reports from companies like American Express, Texas Instruments, DuPont, Verizon, Amgen, Corning, Delta Airlines, U.S. Steel, Bristol Myers Squibb, & Siemens and many more. The general sense is that the reports this morning and last night were not as bad as expected.

Meanwhile, U.S. chain store sales declined 1.8% and Timothy Geithner won confirmation as U.S. Treasury Secretary and has vowed quick action.

Premarket gainers: CVTX, RBS, PSUN, NFLX, SLG, MCK, PL, LYG, GLBL, NM, AXP, SI, TXN, MTXX, ARMH, ZION, NOK, ALGT, FNM, QGEN, BBL, GOLD, ENR, ICLR, VZ, ROH, & CETV.

Premarket losers: GNK, WLL, SLW, CEF, FED, DOW, STEM, GERN, GLW, FLIR, AMGN, DAL, EMC, VMW, SPWRA, GSS, WLL, CEF, PUK, RRGB, TC, ASH, SLW, & ASTM.

The 2-day Fed meeting begins today and at 10:AM a report on consumer confidence will be closely watched. In addition, focus will remain on earnings and forward guidance including any additional job cut announcements today.

If we put together third straight day of gains in the S&P it will be the first time since the last week of December and the last week of November. This is no mere coincidence as the recent trend has been to see gains in the final week of the month. Have a great day!

Earnings, Job Cuts, & Washington

Posted: 26 Jan 2009 07:50 AM CST

Good morning. Premarket futures have been volatile and are currently indicating a positive start to the week.

Investors are busy sorting through another batch of earnings reports (most of them disappointing) as the NABE quarterly survey confirms what most of us already know. Along with more job cut announcements from several companies, the focus remains on Washington as Pelosi says more money may be needed for the banks and more details start to emerge regarding the new stimulus package.

Premarket gainers: BCS, ING, RBS, AEG, SILC, SAY, IRE, GERN, ASTM, WCG, STEM, CRA, WYE, SCHN, DRYS, GFI, AU, HBC, THC, AFAM, ESLR, CREE, AUY, & TASR.

Premarket losers: CRXL, CAT, CBAK, LNN, WIRE, PCX, STLD, TEX, ETN, MTU, DE, FRE, LVS, USB, PFE, ABB, MCD, C, BBBY, & CNH.

At 10:AM we have reports on existing home sales and leading indicators and the Senate is schedule for a vote to confirm Geithner.

Over 900 companies report earnings this week, and of course, if we see any end-of-the-month window dressing it will likely start today. However, anything short of taking out the S&P 850 to 900 level will be seen as nothing but a short-term oversold bounce and will be treated accordingly.

Let's make it a great week!

Another Week Gone

Posted: 23 Jan 2009 05:23 PM CST

You know it's been a tough time for the market when only a smaller loss in comparison to the prior two weeks is considered a good thing.

S&P 500: This Week

For the 4-day week the S&P 500 declined -2.14%, Dow -2.46%, Nasdaq -3.40%, and the Russell 2000 -4.73%.

To win this week you either had to be long and strong gold (see DGP, UGL, GDX, GLD) or be "ultra" short (EFU, SDD, SJH, TWM, FXP). No doubt, today's big spike in oil (USO) will be talked about quite a bit over the weekend not to mention another reversal in tech and financials..

Beyond my screens, some of this week's big upside movers were Satyam (SAY), Stemcells (STEM), Novagold Resources (NG), Geron (GERN), Forestar Real Estate (FOR), Aastrom Biosciences (ASTM), Gammon Lake Resources (GRS), Limelight Network (LLNW), Aurizon Mines (AZK), Northgate Minerals (NXG), Seaspan (SSW), Keycorp (KEY), Hecla Mining (HL), Silver Standard Resource (SSRI), Gold Fields (GFI), Brinker (EAT), Interwoven (IWOV), & Yamana Gold (AUY)

Next week we close out January with a Fed meeting, lots of earnings, and much more data. Go get some rest, have some fun, and I'll see you back here on Monday!

Friday Mailbag

Posted: 23 Jan 2009 04:30 PM CST

Ah, the return of the old mailbag! Here's what I'll be covering this week:

  • Mentoring Opportunities

  • What's Working Now

  • How To Compare & Rank Stocks In Specific Sectors

  • Palm's Big Mo

  • Selling At Price Targets vs Letting Winners Run

  • One Lazy Strategy Which Outperformed In 2008

  • Bad News Priced In On Earnings?

  • Identifying Short-Squeeze Rallies

  • Using Screens For Market Timing

  • The S&P Level To Watch

This is a members' only post. To read, please login.

Trade The Bailout

Posted: 23 Jan 2009 10:48 AM CST

* Don't have time to read all of these links? Every day I select three to read for members. Check it out!

Three In A Row

Posted: 23 Jan 2009 08:30 AM CST

Good morning. Following weakness in overseas markets, premarket futures are indicating a lower open.

Earnings from Google to GE are in focus along with a number of other headlines including a human trial of stem cell based therapy, Pfizer is in talks to acquire Wyeth, and Geithner has issued a warning to China over currency manipulation.

Premarket gainers: FOR, GERN, ASTM, WYE, EZPW, SAY, STEM, SYNA, NTCT, ZLC, CLWR, FAZ, CBST, RVBD, GTXI, GLD, GOOG, GE, & FTR.

Premarket losers: QI, HOG, CRXL, COF, UCBH, BCS, CRBC, ING, DNB, DRYS, WFR, AMD, CYN, FITB, JASO, BIIB, TNL, CME, AEG, RBS, HBAN, FITB, ISRG, NOK, MRVL, & AEO.

There is no official economic data scheduled for release today and, if premarket futures are correct, we're going to book a third straight week of losses in the market. However, keep in mind that if recent trends hold true, we've seen strength in the last week of the month in October, November, and December. While it's not enough to become overtly bullish (just as oversold conditions alone have not been a particular helpful of late), it is nevertheless worth mentioning as we close out another ugly week.

More Earnings & Data

Posted: 22 Jan 2009 08:30 AM CST

Good morning. Premarket futures are under pressure again as investors sort through a lot of earnings reports. The highlight, of course, is better-than-expected earnings from Apple but there were lots of earnings misses and poor guidance.

Not helping matters this morning is news that mortgage applications fell 9.8% from a week ago as the average interest rate on 30-year fixed-rate mortgages increased to 5.24% from 4.89%, housing starts dropped -15.5%, and jobless claims rose 62,000 to 589,000.

Premarket gainers: IWOV, VIGN, THC, BBT, AAPL, CHIC, ESI, FFIV, STEM, ALXN, NWSA, LYG, AIB, RJF, ZLC, NVEC, FITBP, CGRB, CMCO, THC, LUV, BRKR, NITE, HW, MBI, SOLR, BBT, & BRKL.

Premarket losers: ECLP, HBAN, DOX, BPOP, EMITF, CERN, NOK, EBAY, TDY, DRYS, PALM, ASML, POOL, TBSI, BT, CY, CIT, SANM, AMR, FNM, AEG, SNE, STI, SBIB, NOK, CBS, MAXY, & OPTR.

We have the weekly oil inventory data at 10:30 and after the close investors will be watching Google (GOOG), Microsoft (MSFT), & Intuitive Surgical (ISRG) among many others.

As I said last Friday, four-day work weeks tend to be very challenging and this one is proving that out once again. The key for today will simply be to not roll over again and give back more than 50% of yesterday's gains. Have a good one!

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Damage Control

Posted: 21 Jan 2009 11:05 AM CST

* Find more links at the members' only website!

Investment Themes & Trends

Posted: 21 Jan 2009 10:58 AM CST

I asked the following in the membership survey: "What investment themes/trends do you think will play a significant role in 2009?" Here's a another word cloud based on the responses received:

Investment Themes & Trends For 2009

Infrastructure seems to be the top theme for 2009 as everyone expects big government spending projects to rejuvenate the economy. A simple search at Google will reveal many links to articles from those who offer recommendations on how to play this well-known trend.

While I also see the potential here, I'd rather wait to see infrastructure plays find their way onto my screens once their fundamentals and technicals start to show meaningful improvement versus the other way around. Government spending is slow spending and it takes months, if not several quarters for companies that obtain profitable government contracts to show significant earnings and sales gains. While that's ok for long-term investors who can afford to be patient (we all have to be cognizant of our time horizons and objectives), I'd much rather build watchlists now with the focus on finding leaders who benefit most of the trend and then later look for signs of that within the screens I follow. Doing this in the past has prevented me from being too exposed to early trends that never really pan out the way most expect and avoid situations where bullish expectations don't translate into improved bottom line performance right away.

Looking & Hoping For Temporary Relief

Posted: 21 Jan 2009 08:30 AM CST

Good morning. With the S&P down 11% since the beginning of the year, investors are hoping for some relief this morning.

Premarket futures have a positive bias following a better than expected earnings report from IBM. In addition, Obama's economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion dollar stimulus package.

Premarket gainers: AVII, BK, RVBD, ERIC, WGOV, BEE, C, NTRS, TOMO, DRYS, HCBK, CREE, PNC, CNB, WLL, ABT, MET, SAY, STT, IBM, BAC, GFI, MT, JASO, PALM, F, STC, HMN, MS, JPM, & GS.

Premarket losers: OMCL, BCS, AIB, AMSC, LYG, IRE, FRX, FOR, CSH, PLCM, KGC, BLK, RBS, TGT, PEG, HLS, BP, BK, GOLD, & GE. Retail chain store sales rose +1.1% from a week ago and at 1:PM we have the NAHB Housing Market Index. This morning Geithner faces Senate hearings and a confirmation vote is scheduled for tomorrow. Apple will report earnings after the closing bell.

With oversold conditions in place traders will be looking and hoping for at least some temporary relief over the next few days. As usual, many will take their primary cue from how financials trade and whether they find any support whatsoever after the pounding they've received especially over the past few days. Obviously, we need some good news to restore confidence and bring back buyers as oversold conditions aren't going to be enough for anyone other than those with very short-term time horizons.

Have a terrific Tuesday!

The Next 100 Days

Posted: 20 Jan 2009 03:43 PM CST

Inauguration days have a relatively poor track record for the market and today was no exception as concerns over the stability and solvency of the financial system dragged the market to fresh January lows.

S&P 500: 10 Day View

Obama's inaugural address hopefully will be inspiring to many and, as we've seen from the market over these past few months, the challenges ahead are truly tremendous. Over the next 100 days we're likely to see a lot of new government initiatives and, of course, their impact on the market and economy overall. If the last few months are of any indication, this will truly be an interesting time for us all.

No matter your political or market bias, I think we'd all agree that we wish Obama much success over the next four years. There's a lot of work to do to put this country back on the right track.

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