Monday, April 13, 2009

The Kirk Report

The Kirk Report

In The Rally We Trust

Posted: 13 Apr 2009 10:02 AM PDT

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Fair Value For The S&P 500

Posted: 13 Apr 2009 06:01 AM PDT

Good morning. Stock futures currently point to a lower start.

Top headlines in focus include more bankruptcy talk at General Motors, more bank failures, increased congressional scrutiny for bailed-out banks, and a Tarp investigtor is investigating whether banks have cooked their books to secure bail out cash.

We also have some M&A activity this morning. Express Scripts will buy WellPoint's in-house pharmacy-benefit management business for $4.68 billion, eBay agrees to buy a 34.2% stake in South Korean rival Gmarket, and reports suggest that Microsoft and Yahoo! have resumed talks again. Goldman Sachs is also considering a multibillion share offering to help repay the $10 billion it owes to the government.

Premarket gainers: MGM, WLP, YHOO, APWR, DNDN, TTWO, ESRX, SNDA, ANAD, IIJI, BRCD, TCK, WDFC, LVS, APEI, THC, CKSW, RACK, OCNF, TTM, & PCU.

Premarket losers: GNW, WFR, SUSQ, DPTR, GM, WFR, SPAR, ZEP, ROCK, AER, BCSI, PTRY, NITE, XIDE, SONE, JDAS, ACAS, PALM, JASO, BA, & BAC.

There's not much on the calendar for today other than the 10:AM Moody's survey of business confidence. Earnings season won't pick up the pace until mid-week and keep in mind that some markets around the world are still closed today following Easter.

After the S&P 500's largest gain since 1933 (+27% since March 9th), we're overbought and fast approaching key over head resistance levels. For what it is worth, Goldman Sachs' Abby Joseph Cohen says their fair value estimate for the S&P 500 is about 900 and their view for a few months out is about 1025 or 1050.

This earnings season is off to a strong start, but we lose the pre-holiday positive bias and focus will remain on reaction to this week's earnings. On the downside, last Thursday's opening gap has created a nice gap to fill. On the upside, S&P 900 should prove to be a tough level of resistance especially if we don't see some price consolidation over the next couple of days.

Let's make it a great week.

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