The Kirk Report

Bernanke’s Christmas Gift

You may not have realized it, but the Fed just gave everyone their Christmas gift - a short-cover scare so that the smart money can reposition (i.e. go short) and get more defensive, before things really get bad. And, from what I saw on my screens today, reposition they did.

The only thing keeping the market intact is hope for a Santa Clause rally. I really hope that comes true - I have more stocks/etfs to sell.

Be defensive, hold lots of cash, don't be complacent with your longs, protect your assets, and if you're so inclined, look for strength to short. As for putting money to work on the long side, wake me up when we're back to extreme oversold conditions again. I don't plan one single buy until that point is reached. Such a tactic allowed me to survive and thrive in the past and I'm confident the same will hold true now.

We will see better days, but this is not the time for hope and faith that all is well. The market is sending us a message - are you listening?

Actions Of Desperation

Good morning. Premarket futures are in rally mode on speculation that the Fed is preparing to unveil new plans to boost liquidity. Such actions, if taken, following yesterday's disappointment will most likely irritate market participants even further unless the Fed really does produce some shock and awe to restore its credibility and do it soon. In spite of this speculation, global markets traded lower even though not with the same level of disgust we saw after the yesterday's decision.

Premarket gainers: NEXT, CRME, NUVO, CRIS, MTW, CSIQ, ACAD, GERN, IOM, SCON, LEAP, MPG, LNUX, CEDU, ACTG, SOLF, CPSL, SNCR, CHNR, GERN, XING, DRYS, SPWR, FMCN, TBSI, ESLR, PCU, FRO, SMSI, GIGM, JASO, MICC, FCEL, BIIB, CSUN, RGLD, GRMN, ZIXI, and CROX.

Premarket losers: FRPT, UNTD, COO, OFI, ADY, ULTA, NUAN, FBTX, NWK, and AKAM.

Along with comments by Alan Greenspan this morning, we have the reports on business inventories but this market will remain held captive to the Fed. Clearly, these rumors suggest this morning that some were caught leaning the wrong way and they're praying for the opportunity to get out of some positions at higher prices. As you know from reading other thoughts on the Fed, it isn't unusual for the market to bounce around for a few days (if not produce a counter trend rally attempt) in order to figure out what the Fed's action really means to the market. The stakes are even higher now than ever before because we have only 13 trading days left of 2007.

Be careful out there and resist the temptation to trade every swing we are likely to see from now until year-end. From premarket trading, it clearly looks like the same speculative targets are in back in play - namely China, Solar, and Shipping and those who have to grind it out will be using these groups to press for performance. Take care.