The Kirk Report

Trade Like Teflon

Following one of the most positive premarket sessions I've seen in some time, stocks rallied the most since March.

Without a doubt, today qualified as a positive follow-through day which in turn flipped the sell signals recently triggered upside down. As of today's close, all of the major market averages - Dow, S&P, Nasdaq, & Russell - are sitting comfortably back above their 10/20 moving day averages.

Bottom line - the price action suggests we've only see another dip and not the end of the trend. Are you surprised? I suspect not.

However, as I offered in my daily notes six hours ago, the faster we go back to take out Monday's intraday highs the better off we will be especially to avoid a potential head & shoulders pattern. I know it seems ridiculous, if not borderline insane at this point to sing anything but glowing praise for how this market continues trade like Teflon, but until this pattern is invalidated we've got to remain focused up here. The time when this market will cook our goose for good is when we start feeling invincible.

Quick snap-back recoveries like we seen this week do a terrific job of precisely that very thing.

* As we like to do around here on Fridays, I have another strategy session planned tomorrow with Dr. Janice Dorn. (Here are some of her recent articles). I hope you'll find time to join us!

Week 13

The bears keep trying to throw grenades at this market but they keep bouncing back.

After 13th week of the year and the first day of the second quarter, here is where we now stand:

• Dow: +0.71% this week & +4.79% this year

• S&P 500: +0.99% this week & +5.65% this year

• Nasdaq: +0.31% this week & +5.88% this year

• Russell 2000: +0.74% this week & +9.37% this year

To outperform this week being long emerging markets (EDC), crude (UCO), energy (ERX), silver (AGQ), palladium (PALL), gold miners (GDX), coal (KOL) and steel (SLX) were profitable. Also, we saw +5% gains in China (FXI), Russia (RSX) & Brazil (EWZ).

Before leaving for Spring Break, I started a simple contest which asked everyone to submit the number of days they thought we would see a test of the 20 day ma in the Russell 2000. The vast majority (including yours truly) thought that we'd see that test in 11 trading days (by March 19th) but, as we've now seen, the market did what it tends to do best - surprise the majority. In fact the closest guess I received was by the guy who picked today and for that he'll receive a free one-year membership!

Although the markets will be on holiday tomorrow, the newswires will be focused on the monthly jobs report. Once we put that behind us, the focus will turn toward the next earnings season. But, before that gets started, we have the Masters and one of my favorite weeks of the year.

Until then, have a Happy Easter everyone!

Wisdom Of Livermore

"Every once in a while you must go to cash, take a break, take a vacation. Don't try to play the market all the time. It can't be done, too tough on the emotions." - Jesse Livermore

In the wisdom of Livermore, I'm out of here for a couple of weeks until Monday, March 29th. Until then, be well.

Catch & Trap

On the 10th day, Uncle Russ ran out of luck.

Everything that seemed to be working in the bulls favor was absent in today's session. And, frankly, even the most novice of chart readers can probably easily see the head and shoulders formation starting to form on the daily.

But, just like one day doesn't make a bull market, a one day pullback following two weeks of gains doesn't either. We'll need to see fledged beat down as today's action only pulled us back to the bottom of the upward trend channel. If you're going to catch and trap the bulls and the "buy every dip" momentum chasers, we will have to see a lot more pain than this. A lot more!

Read more of my after-hours report.

18 Days

We now know the answer to how many days it would take to reclaim the 20 day moving average in the S&P 500:

Last Wednesday I started a contest asking for people to submit their best guess to how many days longer the S&P would stay below its 20 day moving average. With today's strong advance, we totaled 18 days which is well within Jeff Saut's "selling stampede" concept and one day before I thought we would do it (I guessed 19 days last Wednesday).

As such, it turns out I was the winner in the contest as I was the closest among 28 people who submitted their best guess with the median guess coming in at 32 days below the 20 day ma. Clearly, this up move was not something the majority expected last week which is also why we saw it happen.

Please login to read the rest of tonight's report.

We're Not In Kansas Anymore!

WoooWeee - that was ugly!

Let's see if tomorrow breaks the upside trend to job report days.

* I have prepared a 10 minute video so please login to view.

Stay Tuned

Two days up is about all she could handle...

While the news overall was ok, stocks just couldn't do much although buyers were lurking in big cap technology for a change ahead of "we always offer an optimistic outlook" Cisco Systems. The Russell, however, continued its streak of underperformance.

Please login to read my after-hours report. Remember also that I'm now on twitter!

Back To Back Gains

That makes another +1% gain today lead by strength in the S&P and Dow:

The past two days is the best two-day performance since early October. Rest assure, this is causing some to think we've seen yet another vicious bear trap.

Please login to read my after-hours report.

Week Three

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

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.

Week Two

After three days up and two days down, we finished up week two with a loss.

For the week, the Dow lost -0.08%, S&P 500 -0.78%, Nasdaq -1.26% and the Russell 2000 -1.26%. Granted, it certainly felt worse than these numbers represent especially in today's session which was the worst we've seen so far this year.

To outperform this week being long preferred stocks (PFF), international treasury bonds (BWX), long-term bonds (BLV), consumer staples (XLP) and utilities (XLU) outperformed along with Japan (EWJ). Including leveraged ETFs, the best performers this week were short crude (DTO), short China (FXP), short semiconductors (SSG), short emerging markets (EDZ), short basic materials (SMN), short energy (ERY) and short financials (FAZ).

U.S. markets will be closed this coming Monday in observance of Martin Luther King Jr. and we have a 4-day work week to look forward to. As many of you know, I have found four day trading weeks to be some of the most challenging of all and with so much on the line with earnings, I expect that trend to continue.

Until then, get some rest and enjoy the weekend. I'll see you on Tuesday if not before!