Saturday, January 23, 2010

The Kirk Report

The Kirk Report

Week Three

Posted: 23 Jan 2010 10:20 AM PST

After a strong first week, sideways the next, in the third week the market rolled over and played dead.

S&P 500: 10/20 Day MA

For the week, the Dow lost -4.12%, S&P 500 -3.90%, Nasdaq -3.61% and the Russell 2000 -3.27%. It is interesting to note that the selling was mostly lead by the big caps rather than the small caps which is unusual to see at the beginning of large-scale corrections.

As many of you are already aware, there were lots of reasons behind last week's pullback including sell the news reactions to earnings, breakdown in emerging markets, and dollar strength. In addition, we saw an old fashioned temper tantrum by Wall Street over Obama's regulatory threats. When you combine that with anxiety over easy Uncle Ben's confirmation next week, it proved too difficult for the market hold its ground. So, when the technical supports were violated, stops were triggered and a free fall ensued. That's why we watch those support levels so much!

So, where does that leave us now? Bottom line - we have a market that is in a major pullback and is now threatening to move into a large-scale correction aversion phase. So, how do we protect ourselves and still position to profit? Please login to read my full weekend report.