The Kirk Report

Testing March Highs

It's always helpful in big days like this to step back and put the gains in perspective. To help, here's a 10 day view of the S&P 500, showing that we're testing the March highs:

Again, we really need to see a close above 1350 and for that level to hold on any retest. In addition, watch closely how the market deals with short-term overbought conditions in this liftoff. After that 1400 is a huge level to overcome to pave the way to a counter-trend rally back to the upper end of this trend channel that has developed.

Remember, first step is to break and hold above 1350. Then they have to take out both 1400 and bust this downtrend in a convincing fashion or we're just trading the range and profiting from only another counter-trend rally.

This Just In...

"If we got a half-point cut from the Fed on Tuesday, I think you could see as much as a thousand-point rally on the Dow between here and year-end." - Jim Cramer

Now you know why the market is doing so well today! :)

At the moment, almost 70% of my stock screen machine stocks are higher with with strong performances being put in by Sifco Industries (SIF), L.B. Foster (FSTR), Vimpel (VIP), Mindray Medical (MR), Mosaic (MOS), Mcdermott (MDR), Excel Maritime (EXM), Blackrock (BLK), and US Steel (X). There's really just one notable loser and that is Smith & Wesson (SWHC) as people run away from that stock.

Looking over the ETF leaders, we have SPDR S&P Homebuilders ETF (XHB), ProShares Ultra Financials ETF (UYG), and Market Vectors Global Alternative Energy ETF (GEX) under accumulation. Interesting to see emerging markets not really in sync or leading today's trade which is different than what we've seen previously.

Mid-Day Update

An interesting start of the week so far. After dropping below 1450 in the S&P at the open, we then saw a bounce, a quick retest, and then some strength in an relatively choppy trading. Now the true test is whether they can manage a strong close this afternoon and include more sectors within the strength. A late day failure, especially below 1450 in the S&P, would be a big problem.

We're oversold enough to see some strength this week. For example, any reading below 30 in the trusty T2108 indicator I monitor is an indication that we have to keep our eyes open for a more meaty bounce this week. The challenge for many isn't so much to figure out a way how to profit from the bounce as much as it is to know whether it is the rigth time to sell into and to short any strength.

Past the positive seasonal trends over the next two weeks, I suspect the market will then go back on Fed watch. Despite recent Fedspeak, Fed Futures continue to show that very high expectations remain for more interest rate cuts. That's also is why we're seeing some impressive bounces in the retailers and financials while pure growth stocks are still under heavy pressure. Case in point, in spite of the market's strength so far today, only a third of my screen machine stocks are currently participating in the bounce. That tells me that we're probably seeing some heavy short-covering along with some bargain hunting in the most oversold situations only. Ideally, in any bounce we really want to see everything participate, especially within the prior leadership groups.

Feel Like A Moron

After Bernanke failed to impress, the bears are doing their level best.

Even though the bulls never give up easily, the bears must continue to display full control in order to gain any respect or confidence in their shorts. The market has bounced back so many times from these kind of scary selloffs that you have to feel like a moron not to expect anything different this time. Of course, that's the pure definition of complacency and that alone will ultimately get you into big trouble eventually.

Like the market, I'm seeing a large number of sizeable pullbacks within my watchlists. Amid the stock screen machine, only a quarter of those stocks are up on the day and its always nice to see yet another earnings blowup in the form of Hansen Natural (HANS). Moreover, I can't say my confidence is high today especially after watching how yesterday's research on the retailers and financials have been faring just one day later. Not only do I see the huge rally in shares of Restoration Hardware (RSTO) which was on my high risk retail group, but Sotheby's (BID) which is on my low risk list has been left for dead. Moreover, the high risk financials are in rally mode while the low risk financials are being sold off. One day doesn't make a trend, but it is rare to see my research produce such poor results and so very quickly. Ugh.

Along the same lines, some have asked about how previous junk stock screens (which are created to identify stocks likely to fall) are faring. As of today, October's junk stocks are down -12% (9 gainers & 20 losers) while September's screen is also down -12% (10 gainers and 37 losers). But, in comparison to both, Navellier's top 20 stocks to sell which I'm also tracking is now down -13.4% with no gainers since October 22nd. Now, that is impressive.

Sitting Ducks

We rallied initially off the home sales report but those gains faded fast. Perhaps more rumors of a Fed cut will stir the pot this afternoon. To be sure, it appears that Fed has already added substantial liquidity into financial system this week.

In addition, you may find this tidbit from Jason Goepfert of interest:

"Holding the S&P 500 during the last three days of October through the first three days of November has given a positive return during every year of existence of the S&P 500 tracking fund, SPY. The 12 out of 12 winning trades returned an average of +3.3%, with an average drawdown (i.e. maximum loss) of only -0.7% compared to an average maximum gain of +3.6%. That kind of thing shouldn't be ignored." - Jason Geopfert

So there you have it. A lot of strings being pulled behind the scenes with some very positive seasonality and a pending rate cut to keep us moving. Yet, even more than I saw yesterday, I'm seeing a lot of deterioration and breakdowns in stocks I'm tracking. Sure, there are a few upside movers like Flir Systems (FLIR) and Express Scripts (ESRX), but they are the exception and not the rule.

In sum, it looks like we’re all sitting ducks at the moment so don’t be too complacent about sticking to your stops and raising some cash if you haven’t already done so.

Chasing Gappers

Traders hate chasing gaps after a couple of weak market days.

You can easily understand the psychology of this. After all, if you weren't motivated to buy into the recent weakness, it is extremely difficult to muster the courage to buy now into the strength. Essentially, what looked like a sell situation yesterday, looks pretty good today and unless you're very flexible or have extremely short time horizons, these gappers are tough to deal with.

What I like to do in these situations is to wait for the market to find support area first (hopefully within the first couple of hours of the day) and then some high-volume strength later on. Also, if I needed or wanted to sell something, I'd also use the gap to ring the cash register. The Beige Book throws a monkey wrench into that plan today because we'll likely see some reaction in the tape this afternoon when that is released. All in all, a tough day to be very aggressive even with the earnings news.

Currently a little over 80% of my screen machine stocks are higher on the day with notable gainers in ACH, MLAN, CHL, VSEA, and NVDA. Interesting to see Midland Company (MLAN) rally today after yesterday's price-to-book filter. It is uncanny how often that seems to happen when I flip out that filter.

Lying Low

Much like yesterday, I'm lying low and not doing very much. Even amid this morning's bounce, most stocks are still trading heavy and don't seem to have any conviction in the upticks. Volume also seems to increase on every decline as stops are deployed....[READ]

Staying Out Of Sellers Way

That's no way to start out a big week of earnings. Apparently, the urge is to sell ahead of the earnings news as the analysts cut down some stocks, fears that the credit crisis is not completely over, and diminished expectations for a rate cut make the rounds. Fortunately, the volume is mixed and we may see a modest rebound this afternoon.

Given my bad read in the premarket, I don't trust my feel for the tape today. As such, I'm doing my best to stay out of the sellers way while trying to draw up a game plan for the rest of the week. I have a number of watchlist stocks scheduled to report over the next few days and I've been setting price alerts around those same stocks ahead of that news. Also, it is interesting to see which sectors have maintained a high number of stocks hitting new highs (oil & gas, chemicals/fertilizers, precious metals, heavy construction) even amid today's weakness.

As many of you know, I'm not a big fan of trying to get ahead of earnings, especially given the gains many stocks have enjoyed from the August lows. If I have to trade, I'll usually stick to situations where I think the valuation can support it. For example, the PEG filter of stock screen machine stocks I shared on September 25th continues to be a strategy I find quite helpful. As of today, here's how those stocks have fared since last month's post:

For what it is worth, the same PEG filter turns up the following 15 stocks today.....[READ]

The Gold/Inflation Trade

After pretty much giving up on using gold as a hedge against market meltdowns, we've seen a pretty sizeable uptick in interest in owning precious metals this week. Gold topping $700 an ounce is going to get everyone's attention as a play on interest rate cuts and a weaker dollar if they haven't already seen which stocks have been under accumulation this week.

In case you are curious, the following is a 3-day raw performance filter of the metals & mining sector. The 3-day gains are listed next to each stock:

My stock screen machine is pretty much void of these plays at the moment so as a first step I'll set my sights on the big movers and work from there.

Something To Work With

The carnage ended on Wall Street today and last week's crash fear was replaced with buy the dip chatter.

The good news is that we have something to work with. Last Friday's low in the S&P 500 at 1458 gives us a level to watch and to trade from. As most technical analysts will readily suggest, if the correction is really over we will successfully retest Friday's low and then power higher. In fact, we don't have to go back very far into history to understand this line of thinking. Just look at the textbook low retest last March.

The current hope is that we're now seeing an easy "this is another bull market buying opportunity" repeat. The clear and present danger, of course, is that investors will now load up on stocks and the retest will fail miserably. When and if that should occur, it will get nasty in a hurry.

Like all market tops, market bottoms also are formed over a series of days, which is why I'm sharing screens of stocks (like 50-day bounces) that may help you understand what tells I'm looking at below the surface. For the most part, I was encouraged by what I was seeing out there though we need much more of the same beyond the end of the month markup which could have very well played a larger role than the bulls want us to recognize today. When oversold conditions are worked off (either through time (i.e. sideways basing) or price (more upside)), we'll have more pieces to the market's puzzle. This will be very interesting.

Bow-Wow Situations

Does anyone else find it ironic that the week after Barron's article about how the little guy investor has been missing the rally boat that the market tanks? You've got to love that if you're a little guy and haven't been long and leveraged to the gills over the past couple of quarters. As they say, every dog has its day, I suppose.

Speaking of dogs, two bow-wow situations of major proportions can be seen in both the financials and homebuilders. I guess all of that "subprime is non-sense" and "what housing bubble?" is starting to come home to roost. Perceptions in the market can change like the weather in Minnesota (often and without notice).

A good test of how "contrarian" you are is whether you think the financials and homebuilders are "bet the farm" kind of buy today:

Morning Sellers & Afternoon Buyers?

If you're looking for signs that the bulls have lost their mojo, we're going to have to witness a series of mid-day turnaround efforts fall completely flat.

One of the more persistent trends in place lately is where we have some selling pressure wihin the first couple of hours but after that dries up the buyers come in. That will have to change and we'll have to see a number of bull traps appear or confidence will remain that every dip is another buying opportunity. In situations like this, you have to be careful about letting your stops deploy too early in the trading day.

On another point, Mr. Market took out two more watchlisted stocks: Ceradyne (CRDN) and Millicom (MICC):

It would be nice to see the 50 day moving average in CRDN hold and later the uptrend to remain intact while MICC looks like it is entering a consolidation phase after a very strong rally. Knee jerk reactions are commonplace these days, so it is a good idea if you’re in reaction mode to earnings to make sure to watch how the stocks trade past the first day following the report.

Sector Check: Shipping

If you've been trading/investing in the shipping sector on the long side, you've probably been making some decent money. These shipping stocks have all been on fire of late the there are no less than 10 stocks in the shipping sector represented in my stock screen machine.

As we can see from this 3-month comparison chart, shares of TBS International Limited Class (TBSI) have been on a tear upward this year and are significantly outperforming its peers on a large percentage basis.

So, do I expect this outperformance to continue? It may, but I think the odds are starting to tilt against owning its shares up here. Unlike at any time during this rally, BOP has indicated that sellers are present up here (something we've seen in other outstanding momentum leaders when they put in their respective momentum tops). The most recent example has been in shares of Rochester Medical (ROCM) a big momentum runner earlier this year. When the sellers starting showed up in size at the highs, it was time to be looking for the exit door.

So, how does TBSI look now using Worden's BOP?

I point this out because this morning I sold my retirement position in TBSI. I have a very good profit and the fact that it is trading so much higher than the rest of its peers finally inspired me to ring the cash register on today's big rally. The difficult part is that I still like the group, so now I have to spend time figuring out which of the other plays I think offer a better risk/reward play.

Sector Check: Discount, Variety Stores

While everyone debates on the strength of the consumer with higher oil prices and housing market troubles, my focus is to watch the stocks that have been identified by my favorite screens as potential opportunities in this space. My goal is to gain some insight to whether the end of the care-free consumer is approaching or whether the fears remain overblown and also to locate potential investment opportunities.

For a tell on consumer spending, I like to monitor the stocks with the discount, variety stores sector. As you can see below, this sector tends to lead the performance of the overall market. In other words, when it is weak, the S&P 500 tends to follow. When retail spending is strong, the market will follow:

As of today, there are currently four companies within the discount, variety stores sector that have been identified as good opportunities by my stock screen machine. They are Costco Wholesale (COST), Pricesmart (PSMT), Wal-Mart (WMT), and Dollar Tree Stores (DLTR). When I'm trying to make comparisons between four companies, I like to use SmartMoney's stock compare tool which helps me view each stock side-by-side with each other.

I know all of these companies pretty well (because I've followed each for some period of time). Within the spot check above, I'm gravitating toward Wal-Mart Stores (WMT) as a long-term investment and Dollar Tree Stores (DLTR) as a potential trade. But, let's take a look at their charts:

Looking over these, I have to say I'm most impressed with DLTR as it has the combination of both strong fundamentals and technicals. I also like the technical setup in PSMT, especially if it manages to form a handle from the current cup formation (we'll have to watch for that). Both of these I see as trading situations versus long-term investments. As for WMT or COST, both are safer plays and gun to head I'd have to lean slightly toward Wal-mart even though I can't say I'm pounding the table bullish there. It seems like a stock that if you buy at the bottom of the range and hold a few years you'll do better than a CD or money market, but is that enough of a reason to buy?

So, am I really excited about this sector's prospects given these four stocks? The answer is no. But, I will keep an eye on a couple of things I saw in PSMT and DLTR and if I see breakdowns in either one, I'd be more likely to side with those who think that there are real problems for U.S. consumers and that high oil prices and the housing market are really starting to show a real impact that has broad-range consequences.

Afternoon Roundup

Just about every "down" day we've seen over the past two months has seen this typical pattern. A weak first hour and then a reversal around 10:30.

Buyers are focused on heavy construction, railroads, internet service providers, trucking, and technology while the precious metals are being sold. Many stocks I'm looking at are in a catch-22 situation where they look ok, but I think I can buy them either lower or after some much needed consolidation.

Solar Stocks On Fire

Solar plays have been and continue to one of the hottest theme plays so far in 2007. Clean energy in any form (including nuclear) is a theme that will continue to remain in favor for the foreseeable future so long as there is concern about global warming and increasing demand for energy. I don't see how either issue is going away anytime soon unlike many "theme-based" investments we've seen come and go over the past few years. (Remember the Atkins diet plays?)

This point continues to come up daily in my own screens, especially the technical ones that specifically find stocks that are most heavily under accumulation. Case in point, Amtech Systems (ASYS) is one of today's top gainers primarily due to its exposure to solar power.

Like the water plays, I think we're only in the beginning stages of this trend. As an investor (versus short-term trader) I've been spending much more time than usual to identify companies that stand to benefit the most for that very reason.

Helicopter Ben

Ben Bernanke (aka Helicopter Ben) is getting ready to fire up the helicopter and load it with bags of money to throw at the economy. Or, at least that's what herd really wants to believe after reading today's statement.

If you were heavily short recently, I'm sure you're having close to a near death experience out there. Wow! I've seen my fair share of short-squeezes in my career, but this one really takes the prize. What I did I say about running home to Momma earlier this week? Yikes!

In a matter of just a few trading days we've gone from Bear Market City back to Goldilocks Central. Isn't the market wonderful?

Market Chess Match

The chess match between the bulls and bears continues and I'm still not seeing much buy or sell interest develop. I suspect that if they can keep them down for a few more hours, it will bring out more motivated sellers. But it is only a guess and probably just wishful thinking on my part. The market needs something new to really like or worry about other than the same hopes and fears.

Looking over the new 52-week high list, I'm seeing a plethora of stocks from the oil & gas sector. Stocks like BTJ, TSO, HOC, WNR, MMP, and TESOF are seeing both new highs and increased volume to back it up. Chemicals also continue to remain a hot area in the tape. Pull up the charts of stocks like MOS, CF, AGU, TRA, and TNH if you haven't already. Meanwhile, the new lows list is fairly distributed without many sector-focused situations.

I could probably push my luck in stocks like DSTI, PRGX, or SIMO that are showing some good technical action, but they are some of the few. While I saw some trades last week and failed to capitalize on them, as far as today goes, I'm not seeing the same kind of ripe situations. Best to stay away until that changes for the better.

Oversold Bounce

You've got to say one thing about this market - it sure isn't boring. The bears are getting squeezed a little and/or are taking a few of their nice profits off the table. For now, this looks and smells like an oversold bounce. Powerful and strong, but not a sign that the worst is completely behind us.

Like usual, I find it of interest to see where the leadership groups are (i.e. real-estate, investment services, steel, basic materials, chips, steel, precious metals, machinery, energy, chemicals, etc.) Likewise, I'm seeing a number of reversals within my watchlists - see stocks like FTGX, TSTC, ROCM, RICK, and CRNT just to name a handful.

The December Low Indicator

It's little surprise that the bulls are doing their best to defend this week's lows. After all, the infamous December Low Indicator is now in play. According to Stock Trader's Almanac:

"When the Dow closes below its December closing low in the first quarter, it is frequently an excellent warning sign. The December Low Indicator was originated by Lucien Hooper, a Forbes columnist and Wall Street analyst back in the 1970s. Hooper dismissed the importance of January and January’s first week as reliable indicators. He noted that the trend could be random or even manipulated during a holiday-shortened week. Instead, said Hooper, “Pay much more attention to the December low. If that low is violated during the first quarter of the New Year, watch out!”

Twelve of the 26 occurrences were followed by gains for the rest of the year – and full year gains – after the low for the year was reached. Hooper’s “Watch Out” warning was absolutely correct. All but one of the instances since 1952 experienced further declines, as the Dow fell an additional 10.7% on average when December’s low was breached in Q1. Only three significant drops occurred when December’s low was not breached in Q1 (1974, 1981, and 1987)."

Visit the almanac for the percentage stats.

When In Doubt, Stay Out

Like yesterday, I'm doing very little other than running of few screens, taking notes on which stocks held up well yesterday and which ones are performing the best and worst today. That's how to spend your time instead of hoping or wishing for more strength or more selling. Knowing these things will prove valuable when the time is right.

As usual, the final trading hour takes on increased importance today and I have little sense which direction we'll ultimately end up. As they saying goes, when you're in doubt, stay out. True to form, that's exactly my plan of attack for the rest of the day.

Drive Carefully

It's been awhile since I've see that much pressure on my watchlist and I'm happy to see it. As many of you know, I've grown quite tired of never-ending performance chase that we've been in for months on end. Hopefully the market can do what is needed and clean out the excess and do so sooner rather than later.

I'm still sitting in cash and twiddling my thumbs, reviewing my charts, and scaling down my targets. I've done my research and I'm letting the market come to me. If I miss a reversal here, so be it. We all tend to be very quick to jump on these declines because we're preconditioned to do so following the market we've seen. The gains have also made many of us feel a lot smarter than we actually are. Remember, the biggest declines typically follow the best kind of markets. Reversions to the mean are always brutal.

Don't let discipline fade now the heat is on. Drive very carefully.

Momentum Always Feeds Momentum

Continuing a recent trend of mine, most everything that I sell seems to keep going higher. Case in point, just take a gander at how each of the stocks I sold yesterday are performing so far today. Ugh!

Momentum always feeds momentum and the danger, of course, is that this works both ways. For example, can you even imagine how we'd all be feeling about now if the trends we've seen of the market were in reverse and that stocks kept going down every day with out much relief? Good times tend to make us forget about those kind of markets.

As I've said, enjoy it, profit from it as much as you can, but don't expect these times to continue indefinitely. They never do no matter how much we'd wish otherwise.

Time For Some Defense

Stocks are trading on the heavy side and I'm doing very little (other than taking some profits off the table). While the bulls may very well circle the wagons later on, I can't find a good risk/reward trade today so I'm stepping aside.

This afternoon my plan is to sift through some of the REITs that have been so dominate on the new high list. There have to be some short-sell opportunities in this very overbought and well-loved group. It should be a good time to start tracking stocks which have failed to participate in what has been a terrific rally.

Mid-Day Update

We've got some big movers out there and the money certainly is flowing to some key sectors. I'd like to see the bulls press on and gather some momentum this afternoon even though I'm thinly positioned.

Also, I just posted a new stock screen based on insider buying at the members' only area for those who may be interested. See you after the close.

Year Of The Pig: Market Performance

The Chinese new year begins on February 18th and according to the Chinese Zodiac, it is going to be the year of the pig. As it turns out, I was born in a previous pig year (1971) and it seems like I do have the same personality traits as others who are born in pig years.

In case you're curious, the market's performance in previous years of the pig has been positive. The Dow has consistently gone up since 1935 and the S&P 500 has experienced only one down year in previous pig years. On average, the S&P 500 has gained +16%:

Year Of The Pig:  S&P 500 Performance

1935:  +41.37
1947:  -15.84%
1959:  +9.96%
1971:  +10.78%
1983:  +17.27%
1995:  +34.11%

Year Of The Pig:  Dow Performance
1935:  +38.53%
1947:  +2.23%
1959:  +16.39%
1971:  +6.11%
1983:  +20.27%
1995:  +33.45%

Along with the January barometer, super bowl indicator, etc. this also leads one to believe that this year will be a positive one for equities. Now as long as the December Low Indicator doesn't get triggered, we can just put everything on autopilot - right?

Quick Mid-Day Update

Just a quick midday update.

The bulls were definitely encouraged by yesterday action and more than a few traders are getting squeezed in this lift taking a few oversold sectors with them. Areas showing leadership in today's move are precious metals, oil & gas, trucking, chemicals, farm machinery, financials, and drugs. Sectors being left behind are leisure products, retail, and hospitals.

When you have time you may want to take a look at the following movers: SPRT, SYNT, INPH, HOKU, JADE, FTGX, SIX, RAD, ASIA, SONS, TRA, BHIP, EVOL, and BLK.

Bad Read

Talk about a bad read in the premarket futures. Right from the open the bulls took control and they're taking a lot of stocks and sectors up along for the ride. Waiting to buy the typical morning dip sure wasn't the right plan of attack.

According to my screens, sectors with the greatest percentage of stocks making new highs are drugs, defense, tobacco, media, airlines, and financials. Buyers are also focused on REITs, internet, energy, chips, and precious metals. Improvements in emerging markets (Russia & Brazil) are also helping contribute some bullish bias.

I wish I could say I'm long and strong in this rally, but I'm not. Making matters worse is that I don't have the convenient excuse of not finding good trading setups. If anything, it has been difficult to remain focused on the right stuff this morning. In sum, I seriously hope you're performing better than I am at the moment!

Indicators At Extremes

Jason Goepfert continues to do an excellent job over at his website Sentimentrader.com. As part of my catch-up research, I have to admit that I was slightly taken aback by the following chart showing where the leading sentiment indicators fall right now (bearish extremes are bearish for the market):

Are all of these sentiment indicators at bearish extremes just wrong? It does make you wonder. I, for one, would like to see more balance especially when establishing new long positions for longer than a few days.

Mixed Market

As we enter the lunchtime lull, we have a mixed market with an underlying positive support bias. Sectors showing positive traction include the transports, tech retailers, auto manufacturers, semiconductors, drugs, and internet. Large sellers can be found in the mining, oil & gas, homebuilding, and basic materials.

Starting with a clean slate, I'm in the process of building fresh watchlists amid stocks showing upside mojo. Among some of the early contenders include IFON, RYAAY, GSOL, TEF, SONS, HNP, ARCC, EGLE, DSX, CNP, AGE, ZOLL, AZ, JWN, TM, RPM, SINA, BMY, and HCN. It's early yet and there's a lot of work to do to get back up to speed. I hope you're making the most of this very short trading week.

Not Rolling The Dice

It's pretty choppy out there on this fine Friday. I see some strength in oil & gas, retail, internet, and computer software while precious metals and financials are trading heavy. As for stocks, not very much on my watchlist is moving smartly higher. Sure, there are many modest +1% to +3% upside movers, but not much to chew on unless I want to press my luck.

Overall, I've had a successful week grinding out a few small trades so I'm really in no mood to give back those hard won gains by rolling the dice. Instead, I'm going to run a few more screens this afternoon, do some watchlist pruning, prepare the weekly newsletter, and enjoy listening to some iTunes. I can't think of a better way to spend this afternoon.

Patient & Alert

We're kind of stuck in the mud today. While there are a few hot spots in the retail drug stores, homebuilding, and energy it appears like we're having garden-variety consolidation. Although there are a few big gainers (ISWI, HTI, GOAM, DOCC, VSNT), as you can see from the screen below there aren't a lot of high-volume movers trading above the first hour high:

I'm doing my best to stay patient and alert and, in case you're wondering, I'm putting together another link post. I hope the day is going well for you so far.

Cyber Monday

If shoppers are buying their Christmas gifts online today, they certainly aren't buying any stocks. Right now the market is trading about as badly as I feel which isn't good since I came down with the flu yesterday. Gold, healthcare, and energy are the only groups which have been spared from this morning's pullback.

There's lots of chatter this morning that the market's performance post-Thanksgiving will be similar as we saw last year (i.e. not very good). This defensive mindset was seen in spades last week and it continues today. Obviously, everyone will get more concerned if the bulls don't show up at all today and the volume picks up in the selloff. That would be a notable change of character and the market will respond aggressively to that when it occurs.

Change Of Character

An interesting change of character this morning.

We have relative good news on inflation but the herd is focused on the retail sales. In an environment when everyone is typically just focused on the good, that's notable. Of course, I'll only be impressed if they can keep them down the entire trading session.

I did my level best to catch some EFUT but arrived a little too late and I was too stubborn on the entry. Given that it's the only standout mover today, that runner will be an interesting stock to watch today. By the way, have you noticed the disaster in Bodisen Biotech (BBC)? My screens suggested awhile back this one was a buy, but they were dead wrong if you look at the fallout this week. Ugh!

Hold'em or Fold'em

After a soft open, the bulls certainly didn't waste much time putting money to work. Look familiar?

Buyers are focused on semiconductors, technology, healthcare facilities, gaming, defense, food, transportation, financials, retail and financials. Oil and gas and precious metals are under pressure. Stocks catching my interest this morning include MEND, ISIS, SLXA, CHDX, MA, EFUT, KNOT, AVNX, WYNN, CRVL, ATHR, JOBS, CRVL, LQDT, PHLY, and GRRF.

If they can hold'em up here until 1PM there's a relatively good chance for a strong close.

Political Consternation

After some political consternation, the buyers are coming in and the rally continues. Microsoft (MSFT) is certainly helping us out this afternoon along with expectations that Cisco Systems (CSCO) will have good things to say after the close.

Buyers are focused on gaming, energy, utilities, retail, and tech while healthcare, precious metals, drugs, defense, and home-building are the day's losers. I've been twiddling my thumbs for the vast majority of the day. I'm in no mood to chase this bull stampede. So, what else is new, right?

The Dip Evaporates

We'll, that sure didn't take long. After last week's feeble decline, we've just regained back that lost territory. Those Monday morning inflows must be quite large and I do wonder how much of this move has been generated by short-covering. The fear I'm hearing is being generated on expectations that we're set for a post-election rally. Given how shallow the pullbacks have been, that's very easy to understand.

Along with semiconductors, lots of strength can be found in transportation, hotels, precious and basic materials, restaurants, and gaming. As you know, I would have preferred some additional consolidation ahead of the news tomorrow, but apparently I'm alone on that view.

Stocks I'm tracking today include the following: ANTP, COGO, CHDX, SIGM, LPTH, DIVX, PSTI, NEU, FMCN, BMTI, LMRA, DTLK, QTWW, ESLR, MA, JOBS, XING, and MIKR. There continue to be attractive setups for the bold and brave, neither of which I am at the moment.

The Junk Mail Indicator

Like many of you, I receive tons of marketing literature from financial newsletters and stock advisories. Although I generally pitch this stuff into the recycling bin as soon as it comes in, I recently noticed a substantial increase in junk mail that is trying to take full advantage of the bullish sentiment originating from this rally. Just take a look at this envelope:

Catch the next wave in the bull market? Wow! If memory serves, just a few short months ago most of the junk mail I was getting in talked about "How To Profit In The Next Recession," and "Go Short Now - 10 Stocks Set To Go To Zero." Which, of course, now has me wondering - is the junk mail we receive the ultimate sentiment indicator?

Mob Mentality

"One of the ironies of a strong market move like we have seen lately is that it can help quite a bit not to be too intellectual about what is happening. The more experienced you are in the market, the easier it is to think yourself out of a good trade. Some of the smartest market pundits in the world simply overlook the fact that the market doesn't care about all their fancy arguments and complicated theories. The market isn't rocket science, it's a mob with a mess of emotions." - James De Porre

Well put. The mob, at least so far today, apparently wants to see the bottom line earnings before jumping on the bandwagon though the strong underlying bid remains even in overbought conditions. Energy, capital goods, basic materials, and semiconductors are leading the way and even the stock bloggers have finally turned positive this week!

Positions I'm watching close out there today include OVTI, FTI, ININ, RVBD, GERN, CWTR, MRVL, GRP, EZPW, ATHR, INPH, ERS, and JST. No trades so far but I've come very close on a few.

Slow On The Uptake

The bulls are running once again as the short sellers take cover. Overall the buyers are focused on restaurants, hombuilders, energy, retail, basic materials, and technology. One of these days we're going to see a nasty intraday reversal, but waiting for that is like watching paint dry.

Like yesterday, I am seeing a few setups this morning though admittedly I've been slow on the uptake. By and large, most of my watchlist stocks bolted out of the starting gate this morning but aren't seeing much traction following that move. Trading in CTDC so far is a classic example of what I'm talking about. I suspect we're seeing a fair amount of program orientated trading in this lift.

Following a quick lunch, I have several more screens to run and stocks to watch this afternoon. I hope this finds you well.

Chopping Around

With the sole exception of Corvel (CRVL), my watch lists stocks are chopping around. Looking over the gainer's list today, I don't see many stocks I'm currently tracking...

The weather here in Columbus, Ohio is beautiful and I'm going to enjoy it with Mom. See you tomorrow!

Are We There Yet?

Another rally attempt to close at new record highs falls just short.

There's lots of chatter on the trading desks about technical non-confirmations and hedge fund trouble. The mood of the market, if you will, is to not give the bulls much credit while the bottom line numbers are indeed very impressive. Up +3% so far this month, the Dow is on track to post its biggest monthly gain since July 2005 and its largest September gain since 1998. I sure didn't see that coming.

Meanwhile, according to TrimTabs so far $3.15 billion has flowed into U.S. equity funds this month which is much higher than last month but still pacing very at the low end of the spectrum. So far this year only $28.9 billion has flowed into U.S. equity funds vs. $111.2 billion in 2003 and $129.7 billion in 2004. Is there a chance will see that pick up in the weeks ahead? Much skepticism remains (and frankly for very good reason) but investors do chase performance. It will be significant on how this balances out.

As always, I hope this finds you well and in a very good mood. The fall has certainly arrived here in Minnesota and the beautiful fall colors outside my window serve as ample reminder that we're approaching the final, and frankly my favorite trading weeks of the entire year.

Sucking Wind

The bounce in energy is playing out once again while most everything else is sucking wind.

For the most part I'm staying busy by reviewing a lot of charts while keeping my eyes on a handful of stocks (OPTC, INPH, SGMO, CBAK, and FTWR). There are some movers out there for the brave if you are well-motivated but I'm not finding a plethora of attractive situations.

In short, the market looks and is currently acting very tired.

New High Perception

If you've been a bear recently due to higher oil prices, expectations for weak consumer spending, the housing bubble, slower growth, and hyperinflation, do you now see the market setting new highs and decide to change your view? Answer this question honestly and you may surprised at the answer you give.

Remember, the stock market moves on perception, not reality. Whether we like it or not, that perception is based on what the market is actually doing, not what we think it should do.

If you have been monitoring the weekly money inflow/outflow data there is something that even the bears must loose sleep at night over other than just the soft-landing talk. There is a lot of money sitting on the sidelines (yes, I'm included in that group) and it wants and really needs to find the best return possible. Because investors always chase performance (that's a consistent factor you can count on), new highs in the market WILL change the attitudes of many especially if this persistent uptick continues during one of the worst seasonal periods for the market.

As for me, I'm sitting on my hands and watching a few stocks, but doing very little. For the most part, most of the watchlist stocks aren't providing ideal entries so I have to stay passive amid all of the hoopla. See you after the closing bell.

The Return of Confidence

Confidence is not only returning among consumers, but investors as well. The bulls are doing a good job of keeping the pressure on.

Leading us the way higher include strength in capital goods, machinery, basic materials, retail, and the transports. A bounce in energy is also underway while there is a bit of pressure in selective areas of technology and healthcare. As you can see from the list of 10-day highs, you can see where the stock-specific action is out there:

Buy The Ugliest

What is working the best out there today is the ugliest. Energy and precious metals are doing well, while most everything else is seeing a fair amount of profit-taking.

I'm taking notes on which stocks in these oversold areas are registering the largest bounces. For example, in the oil services and drilling area, stocks like DO, TESOF, ESV, NE, RIG, and TTI are leading. In precious metals, stocks like SIL, AAUK, VGZ, and ABX are golden. Knowing what stocks can lead a bounce (if there is any rhyme or reason behind it) can frequently point you in the right direction. I'm also taking notes on the stocks falling the most in the overbought areas, like semiconductors. Stocks like FORM, VECO, SWKS, and RMBS are having a tough go out there today.

Sell on Rosh Hashanah and buy on Yom Kippur? If that happens, it will be the first historical trend that gives us a good tell over the past two months!

Sector Leadership

If the bulls didn't rally the market on this morning's headlines (lower interest rates, oil prices, strong earnings) I think everyone would get very concerned.

Looking of my screens this morning, the energy to tech trade continues to work wonders as well as intense interest in the retail group (take a gander at CBK, SCVL, GYMB, CHS, CTR, DBRN just to name a few). Notable gains can also be found in the financials (LM, SF, NITE, BSC, and GROW are leading the way).

The tape's fate this afternoon rests in Bernanke's hands. That will keep some of us sidelined if not let up on the gas pedal a bit ahead of the news so be prepared to see some choppiness in the coming hours.

Buy The Rumor, Sell The News

When the market fails to go up on good news, you know what that means - it has already been priced in. While I don't think that is completely explains the pressure we are seeing at the moment, it is a change of character from what we've seen since the month began. It is too early to say how much the problems in Bangkok and over at Yahoo (YHOO) are playing a role.

I'm watching a few stocks like CTCI, FNET, TLB, and TAR, but doing very little. With semiconductors under pressure (one of my key sentiment tells), it is difficult for me to muster enough motivation to put money to work. Perhaps the typical September funk has returned, at least for the day.

Standout Movers

Two steps forward, one step back. So far, today is that step back and not even a very significant one.

Sectors showing strength include semiconductors, construction, railroads, basic materials, precious metals, and oil services while gaming and auto parts are weak. The standout movers on my screens include OMNI, TOMO, AXR, HSR, SIM, HITT, FORM, FMD, SNDK, LTON, and CSH.

Other than catching up on my reading and putting together another link post, not much is going on here.

Oversold Bounces Galore

Nice strong action out there today. Oversold bounces in energy, commodities, and the homebuilders are helping push us higher.

I've got my hands full with the action FortuNet (FNET) at the moment. (See this previous post.) How high can this one bounce I don't know, but it sure is making my trading day an interesting one.

Profit-Taking

Time to take some profits? That seems to be the theme of the day so far. Still, we've seen our fair share of morning declines and afternoon rallies of late. The bears certainly need to do more than this to gain back some much needed self-respect.

As usual, I'm running my screens and finding very little to chew on. My watchlists are baked in red and not much of interest is moving down to levels that interest me yet. So what else is new, right?

Expect Choppy Action Ahead

Lower consumer confidence? No big surprise there given the sentiment polls that gauge investor sentiment these days.

Given what I'm seeing this morning, those of you trying to grind it out should expect a fairly choppy tape to contend with. I'm not sure what folks expect from this afternoon's FOMC minutes, but I'm sure they'll try to make something from it.

On such a beautiful day, I am scheduled to tee off with Michael Steinhardt of HEDGEfolios at 11:04 AM. He'll see for himself that I'm a much better trader than golfer. :)

Q&A With Laszlo Birinyi

It's a slow day and while there are a few runners (HOKU, ANST, SUPG, BDCO) for those trying to grind it out, I'm not participating.

One week ago members had access to the Q&A with Laszlo Birinyi and we've agreed to open up free access to this Q&A for your reading pleasure. So, if you haven't had a chance to read it, here's your opportunity.

I'm going to sign off for the week and wish you a nice weekend. See you back here on Monday!

No Traction

The bears owned the morning while the bulls owned the afternoon. Does anyone really care?

Until the big boys and girls come back from the Hamptons, I'm in the camp that if you can't beat'em, you might as well join'em. Do yourself a big favor and take a 3-day weekend. Trust me, you'll need your rest when the big guns come back from vacation.

Dr. Jekyll & Mr. Hyde

The Dr. Jekyll and Mr. Hyde tape continues. The headlines were not very cooperative and the market's upside momentum has reversed.

I've been running stock screens today (two of which I just uploaded to the members' only website) and this afternoon I'm going to tackle a very time consuming task - the transfer of my files and data to my new laptop. Lenovo's ThinkPad X60s just arrived a few minutes ago via UPS so I'm sure I have my work cut out for me this afternoon. I dread getting a new laptop because it takes forever to get it set up and the files and programs loaded and transferred properly. I'm sure many of you feel the same way.

As interesting the market was last week, so far it has been anything but this week. As always, I hope this finds you well.

Hawk Talk

Jack Guynn and Michael Moskow talk tough and traders press the escape button. How typical.

Basic materials, healthcare, energy, and some selective tech are working ok, but again, nothing to write home about. I'll be back tomorrow. Hopefully by then we'll have more to chew on.

Difficult To Game

Has the buy-the-dip mentality returned? It certainly appears so.

With little unusual movement on my watch lists (and the market overall), I'm doing some catch-up work (running a few screens, reading stuff I missed over the weekend and on Friday, answering email, etc.) but not much beyond that. We're in a period right now where intraday movements tend to be extremely difficult to game due to the very thin trading conditions. As usual, where we close out the trading day is more important than where we trade intraday.

I'll be back later this afternoon with some links to share.

Steadily Moving Higher

There's little volatility to this day. We're just steadily moving higher.

The pullback in oil prices is helping as those positioned for an August breakout are reversing their positions. Where's another hurricane when you need it? Don't laugh - I'm sure there are traders thinking along those same lines.

My watch lists are still not keeping up with the overall positive bias. However, I am seeing plethora of short-squeeze situations out there. If you just run a simple screen looking for heavily shorted stocks, you'll find many of those stocks in today's winner's circle.

Just so you know, I'm still working on today's random post while looking for any signs I should pull the plug on my one and only long position in the QQQQ.

Like White On Rice

How high can they take'em? Umm. It depends on how much traders think they're positioned wrong. Stubborn folks will try to defend their positions here, but given the inability for the tape to break down combined with the overall impatience of the herd, the bulls are in complete control.

Given what is moving higher today, it is obvious that traders have set their focus on the beaten-down situations like PARL, TOMO, ZOLT, PBY, RACK, and CHRS just to name a few of today's movers. As we know, the quickest way to make up for underperformance is to shoot at the situations that have the most bounce potential and traders are on these names like white on rice.

Time To Do Some Praying

The market is holding the morning's gains and the tape is showing few weak areas at the moment. Looking over the strength, bargain hunters are picking at some of the worst performing sectors. Or, should I say that the short-sellers are giving up on their favorite areas.

Despite the new surge of optimism that Bernanke is dead right about inflation and the economy (folks really want to believe things are going to come up roses), I'm still sitting on my hands. The fact that two of my watchlist candidates - Simclar (SIMC) and Medifast (MED) are getting trashed certainly have something to do with it.

All I have to say is that the bulls better pray for a much weaker-than-expected CPI tomorrow morning.

Grocery Stores Are Hot!

Yet another ugly intraday reversal to start off the trading week.

Weakness in energy and precious metals seemed to drag everything down by the end of the day. Meanwhile, the buyers were focused on grocery stores. If that doesn't say something about where folks think the economy is headed I don't know what does.

See you tomorrow!

Yet Another Snapper

The bulls are giving it a good shot today. The 11:AM buy programs came in like clockwork and t