Monday, February 2, 2009

The Kirk Report

The Kirk Report

The Big Fix

Posted: 02 Feb 2009 01:19 PM CST

  • The Big Fix

  • Bank rescue plan scheduled for next week

  • Businesses fare better in Senate Economic Package

  • Stimulus and the Senate

  • Enjoy your stimulus now, play your $14K bill later

  • New month, more fears

  • Bank Bank just one option considered to save financials

  • How much will it take to fix the banks?

  • S&L crisis offers a guide for meltdown

  • Rescues and Stimulus

  • Economists cursing out economists

  • According to Meredith Whitney, taking toxic mortgages off banks' books only begins to address their fundamental problems

  • Is widespread foreclosure the best solution?

  • Gary Kaltbaum offers some free advice to Obama

  • It turns out that the TARP money given to banks as recapitalization was a major factor in the total GDP number

  • If you don't like the numbers - just cook'em. Big changes are in store for financial statements

  • The economy is even worse than it looks

  • For the first time since 2007, Treasury investors are betting that inflation will accelerate

  • "Polyannas and perma-bulls who, despite growing odds, continue to expect a midyear economic recovery should leave their rose-colored glasses in a drawer." - Doug Kass

  • "If you are going to play you need trading range strategies. Buy low, sell high. It should be many months before we can switch to trending market strategies of buying breakouts." - Michael Kahn

  • Newsletter gurus haven't given up, but they're gloomy

  • Investors may be too pessimistic about stocks

  • "My suggestion is to forget all the bottom calling and do not fall in love with your positions the way you might in a bull market. A bull market forgives all sins, a bear exposes them." - Helene Meisler

* Many more links can be found at the members' only website

January Barometer Portfolio

Posted: 02 Feb 2009 10:33 AM CST

According to the Stock Trader's Almanac, Standard & Poor's top 10 industries in January outperform the index over the next 11 months. To wit, the sectors which outperform in January have a historical tendency to outperform for the full year.

Although I don't have a source that will allow me to see the January performance of every Standard & Poor's top sub-industries, I think for general purposes we can get a sense of relative outperformance by just looking at the S&P's Sector Tracker:

S&P's Sector Tracker

So far all of the industries are struggling, but we have relative outperformance of three main groups - Utilities (XLU), Health Care (XLV), and Energy (XLE). Here are their charts:

XLU

XLV

XLE

As many of you know, I use Telechart which relies heavily upon Morningstar's Industry Groups. In fact, I utilize this for the stock screen machine as well as you see if you visit the All Screens filter which displays every stock currently found within my stock screen machine with their sector. To see which industry groups have been outperforming the most in January, here are the top 20 Morningstar subindustry groups in January:

Morningstar's Industry Groups

While I'm not a big fan of utilizing these kinds of historical tendencies for buy-and-hold portfolio construction using just the performance of one month, so many out there do and for that reason alone we should be aware of this pattern and subsequent performance. Like always, knowing which sectors outperform and underperform is always a good idea no matter what time frame you use.

Groundhog Day

Posted: 02 Feb 2009 08:30 AM CST

Groundhog Day
Good morning. After the groundhog saw his shadow predicting six more weeks of winter, investors are wondering if January's barometer will hold true in 2009.

In premarket trading there's a slight negative bias even though there's not a lot of market moving headlines out there leaving investors to await more progress on Obama's rescue plan and stricter rules for TARP aid.

Meanwhile, regulators had to shut down three more banks in the U.S., personal spending and income were mostly inline with expectations, and the ECB is drawing up bad bank guidelines.

Premarket gainers: GGP, OMEX, AIB, BANR, USG, NCX, BRKR, SGMS, DROOY, SAY, GNW, HIG, CENX, RTP, PFE, RYAAY, HGSI, BEAV, & SPWRA.

Premarket losers: ROK, ASTM, STEM, DRYS, MAT, SIG, ABB, NYX, IP, MI, CPO, CY, RMBS, PALM, UBS, BAC, BCS, GNW, ABB, C, NICE, BBL, HAS, BP, SIG, GOLD, F, WFC, & MS.

At 10:AM we have reports on Construction Spending and the ISM Manufacturing Index and more earnings after the market close. It's February and historically that has provided a mixed performance with the first half of the month stronger than the second half. Of course, all eyes will be watching for a breakdown of the 800 level in the S&P and 8000 in the Dow that sets up a retest of the November lows. For today, look for the volume to pick up as the day goes on as people work off the superbowl funk.

Let's make it a great week!

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