The Kirk Report

Good morning. U.S. payrolls jobs fell by 524,000 in December, pretty much inline with what economists expected. Unemployment jumped +7.2% and November's report was revised with another -150K jobs lost.

In other news, Fed's Rosengren says the recession more severe than thought and there's more criticism of the Treasury over TARP.

Premarket gainers: YRCW, PALM, APOL, MDRX, IHS, AZZ, DFT, AMMD, HWAY, MTZ, SNX, OCNF, LWSN, DRYS, EGLE, TBSI, YHOO, & ISYS.

Premarket losers: OREX, EBS, ASIA, IFX, CVS, AAUK, CIEN, BPZ, HNSN, AAUK, ASIA, COH, MT, BBY, CSKI, LTD, HXL, TLAB, & ALVR.

Keep in mind that regardless of the jobs reaction, a very strong move in either direction at the open is usually reversed by 10:AM. There are no guarantees, but that's how past strong reactions have played out on average.

I have to say that it was interesting to see a notable improvement in the premarket futures even before the numbers were released indicating that more than a few are gunning for a "buy the bad job news trade" today. I'd say look for the market to show its true colors by 10:AM and work from there.

Have a great Friday!

* This report was provided to members at 8:44AM. Premarket posts here are delayed until 9:30AM every day.

Earlier this week we reviewed the performance of members' top picks for the fourth quarter. The best performer was Emergent BioSolutions (EBS) with a +99.47% return which was recommended by two members - Abramov Andrei & Bob Witte.

As I've done in the past, I asked each member to answer a few questions for us and they've been kind to share them. Enjoy!

NAME:  Robert D. Witte (Des Plaines, Illinois)

PROFESSION:  I earned a B.S. in Civil Engineering from the Illinois Institute of Technology. I retired about five years ago from Harza Engineering Company in Chicago, after a forty year career as a structural designer and Project Manager of hydroelectric projects.

MARKET EXPERIENCE:  I bought my first stock in 1965 on a hot tip and lost about 98% of my investment! It was a speculation on the development of oil shale in Utah. After that adventure, I realized that I had some serious shortcomings in my stock market investing skills. I confined most of my trading to mutual funds in my 401k account. My trading decisions were based on emotion and I never made much money.

After I retired, I concentrated on learning how to trade. I have learned more about trading in the past five years than in the previous forty years. The internet has made a tremendous difference. I remember when my “system” consisted of going to the public library and looking at outdated stock charts. It was like trying to read tea leaves and just as effective.

I found an excellent instructor named Russ Rzeszutko at Oakton Community College in Des Plaines and took his courses on technical analysis, interest rates, foreign exchange markets and supply side economics. These courses provided a base for my investment knowledge. Jack Chan at simplyprofits.org has been very helpful in sharing his strategies on technical analysis and money management. Finally, I have learned a great deal from the Kirk Report, and regularly review the stock screens.

MARKET STRATEGY:  I use technical analysis and sector analysis for selecting stocks for potential trades. I use a combination of trendlines, RSI, MACD, stochastics, and a series of 3 short term arithmetic moving averages to select entrance and exit points. The moving averages are an effective way to catch a trend early. I also monitor the number of stocks trading above their 50 day moving average as a general timing indicator- an idea courtesy of the Kirk Report. In my experience, the best places to find potential trades in a down market are in the new 52-week highs list and the top 100 stocks list. I found EBS in these lists on September 26. EBS had the best chart that I could find, was in a relatively strong sector, and had significant profits with a low P/E. EBS appeared to have potential as a low risk/ high reward opportunity.

MOST IMPORTANT THINGS I HAVE LEARNED:  Investing is a risky business, and profits do not come easily. Exercise patience and develop your investment skills before risking a significant part of your savings. Never stop learning.

NAME:  Abramov Andrei (Baltimore, Maryland)

PROFESSION:  I’m 42 years old and a fresh investor (2 years). I came to USA from Ukraine 11 years ago with my American dream, working all types of cleaning, kitchen, construction jobs. I have bachelor degree from Madison University in business. (Distance learning). I’m working for small stuff agency and another is renovation and home improvements.

MARKET EXPERIENCE:  I started to be interesting in stock 2 years because of Jim Cramer's TV show “Mad Money.” I ordered a lot of translated books from Russia because there were a lot economic and financial slangs that I did not understand the sense even in my native language. I subscribed for WSJ and Barrons. I was keeping reading and studying some books from your recommended list.

I found info about you and your site one year ago in the book "The Dick Davis Dividend." No doubt that I became your member. I learned more from your mailbags, comments, and interviews than I had learned from big and expensive books. For me it’s a big honor to be member of your circle. You are my mentor and distance guru. Thanks Charles for what you are doing.

MARKET STRATEGY:  I’m just making my first steps in trade. In addition to your website, my favorite screener is Finviz. I also use MSN Money. I also read some Russian language sites. I'm also a subscriber of Harry Domash's Dividend Detective and find it helpful.

My favorite companies are who pay monthly dividends, have no debts, and hold lots of cash. I also like international dividend payers. I also found out your pre-market winner and loser names have a lot of potential for one-two day’s trade as a strategy. I have tried a lot of your pre-market winners and they work.

I recently took back full control of my investments after my 401K at Fidelity lost about 55% last year. I'm doing a lot of paper trading and portfolio creation right now and I've been successful of late (my portfolio is up 19% for the last month and a half).

MOST IMPORTANT THINGS I HAVE LEARNED:  When I came to this country I had several dreams - have a house, my own company, and a couple of investment properties. Now, I want to learn to become a trader. I really enjoy the conquest and new challenges that trading provides. I've learned many things, but translated from Russia, here's a motto I try to live by I'd like to share with you and other members:

"If we might have a second chance to live the days one more. And rectify mistakes we’ve made to even up the score. If we might have a second chance to use the knowledge gained, perhaps we might become at last as fine as GOD ordained. But though we cannot retrace our steps, however stands the score…..tomorrow brings another chance - for us to try one more!"

Thank you Robert & Abramov. I look forward to having you as lifetime members!

Here are some of the replies I received:

• Knowledge is better than luck, but luck surely helps

• Don't try to guess where the market is headed - you'll always be wrong to some degree. Trade what you see not what you want to see

• Let the market speak before I get in the correct mindset to trade. If I don't, my losses mount

• Eliminate greed and take my time. Be cool

• Always limit your downside and don't be afraid to go short

• Markets do and need corrections

• Trade in smaller positions when strategies fail to work as they have in the past

• Don't just think about stop losses - but use them!!!!!!

• Patience and discipline to stay out of the market if one doesn't have a good idea

• Always believe the charts

• Gurus who predict the future about the stock market and particular stocks are no better than me

• Pay more attention to the technicals

• Thoroughly understand your own risk tolerance

• That there is no simple system that will work every time

• When profits come too easily, it is time to reduce risk

• I learned to trust myself and follow my own plan

• Comparing stock market returns from the past 50-100 years bears little insight into the next 10-50-100 years. We live in a completely different world and face unique challenges and unknowns

• Sometimes the best move is no move

• You must learn to think for yourself

• Trends, once established, last much longer than anyone expects

• Clear entry and exit points before the trade is critical

• Understand the various scenarios that the market may present you and then plan your actions for each of them. That is preparation, not prediction. Prediction tends to bind you to one point of view because when that doesn't come true, you don't know what to do.

• I've learned to seek out opinions that challenge my analysis and beliefs and ignore the rest

• Anything that "can never happen" can happen

• When the heat is on, you must stick to your plan and obey your trading rules

* This is only part one of five. Many more lessons will be posted at the members' only website.

Good morning. Premarket futures are under pressure following the two reports on the job market.

According to ADP, nonfarm employment fell by -693K from November to December which was far worse than consensus of a loss of -493K. In addition, it was the worst December for layoffs on record according to Challenger Gray & Christmas. Both reports come ahead of Friday's employment report.

In other news, Meredith Whitney warns that banks may have to raise even more capital in 2009, mortgage applications fell -8.2% from a week ago, Obama and House Financial Services' Barney Frank reach an agreement in principle to release the second half of TARP funds, GM says it has enough loans to cover its worst-case forecast, Intel cut its 4Q forecast, Alcoa slashes jobs, and European Central bankers and government officials note the possibility of a prolonged recession.

Premarket gainers: LJPC, ICOG, DXCM, CPY, TSEM, NTCT, BBI, SWKS, IWOV, PLCM, FDO, MON, MYL, KEM, MPG, ES, FDO, FFIV, AKS, KBR, MU, RMBS, CAJ, & HMC.

Premarket losers: SAY, AY, GU, IBN, IXYS, SMSC, AAUK, AA, ZOLT, CHS, CHU, TTM, CTSH, MCHP, ACAS, INFY, ERTS, EGLE, SOLF, DRYS, TITN, TBSI, WYNN, QI, & MEA.

At 10:35 we have the weekly petroleum status report and Thomas Hoenig is scheduled to speak at 1:PM. However, this morning's data on employment will remain front and center and we'll see if that makes much of a difference to the overall bullish tone we've seen in recent days.

The good news is that if the market can digest this data today without too much technical damage (again S&P 900 or above) and lower expectations into Friday, that will at least take some of the risk out of another bad jobs report on Friday since now everyone will probably expect the worst. After all, I doubt those putting money to work recently didn't expect to see more bad news on the jobs front, so it will be interesting to see how much or how little this news pressures the market from a sentiment perspective. Overall, we're still well into overbought territory and choppy action is the most likely scenario in my view, so be selective out there with those entry points as a little patience right now will likely open up better trades in due time.

Have a great day!

• The engines that have lifted the U.S. economy out of every recession since World War II will be of little help this time around

• Another drop in factory orders!

• Pending home sales disappoint (but data doesn't reflect impact of falling mortgage rates)

• Another contraction in non-manufacturing activity

• What about corporate earnings in 2009?

• This week's earnings calendar

• Geezeo’s Main Street Spending Index is a near real-time look at spending trends and consumer sentiment survey data

• Will we do what’s necessary to prevent Great Depression II?

• What about bailing out California, Florida, & Michigan?

• And the poor credit card companies and commercial banks?

• Government rescue great for GMAC and GMAC only

• U.S. debt expected to soar!

• Who is going to bail out the FED?

• Can the US economy afford a Keynesian stimulus?

• Live by the Fed’s pump-priming, die by the Fed’s pump-priming

• 1929 vs. 2009: Depression Bound?

• 2008: Annus Horribilis, RIP!

• What went wrong!

• Risk management!

• 25 years of conventional wisdom, down the drain

• The end of the financial world as we know it

• Trends that will shape 2009

• Themes for 2009

• Ken Heebner humbled

• Wall Street lipstick!

• Byron Wien's predictions for 2009

• "Patience, persistence and perspiration will make an unbeatable combination for investment success in the months ahead." - Doug Kass

• Kass' 20 surprises for 2009

• Five unforgettable and oh-so-wrong predictions from the past year

• The worst predictions about 2008

• Laszlo Birinyi thinks the bottom's in

• Anthony Bolton, another bottom picker

• It's tough making predictions, especially about the future!

• Lazy portfolio creators see winning times in 2009

• 80% of top performing newsletter gurus are bullish on 2009

• Chasing performance through newsletters? It may prove to be a poor bet

• Nostradamuses are out in force. Wrong again?

• What's the dumb money doing right now?

• The mood of the markets

• Wall Street strategists see an average +16.9% gain in 2009

• Searching for a Bottom? Technical indicators of a turning point

• Have you asked yourself what if everyone is wrong about Treasuries?

• Why you should keep a wary eye on treasuries

• At the first sign of strength, some investors may become amnesiacs

• Obama-related optimism

• Obama stimulus may not be ready until February

• Fund managers make the case for Asia

• China's $200B sovereign wealth fund says cash is still king

• China must devise a new formula for their economic well-being

• U.S. will emerge as undisputed top dog in 2009

• Fiscal shift in Germany

• "Don’t overestimate the skill and wisdom of professionals." - Peter Lynch

* Many more links can be found at the members' only website!

Good morning. Premarket futures are showing a positive bias as Obama's stimulus plan remains in focus. With billions at stake business lobbyists are lining up for their piece of the action.

Otherwise, the newswires are relatively quiet this morning. Premarket trading is seeing some interest again in oil and energy plays and the morning's only datapoint - U.S. chain store sales - actually rose +1.4% last week. Meanwhile, Toyota has also announced they will halt production for a couple of weeks to trim inventory.

Premarket gainers: IDEV, ALDN, OREX, ACAS, QI, RTP, BBY, DOW, HOV, MT, BHP, AAPL, BAC, MOS, DRYS, TTWO, TCK, HOGS, AAUK, GOLD, PBR, EXM, CHK, YRCW, TXCO, ALVR, ISYS, & SRZ.

Premarket losers: LDK, VDSI, AET, STV, IMN, VE, DNN, MEAS, YGE, RBS, MOS, ENDP, STP, LOGI, ICE, ELX, ESLR, GRMN, & NTAP.

At 10:AM we have reports on factory orders, the ISM non-manufacturing survey, and pending home sales index and at 2PM the FOMC minutes will be released. Among these, the FOMC minutes will likely be of most interest due to the Fed's new "quantitative easing" and the reasoning behind that move.

Much like yesterday, today's trade is simply about working off the overbought condition without a catastrophic rollover. Holding above 920 on the S&P (or really anywhere above 900) would be exactly what those still putting money to work at these levels need to see.

Have a terrific Tuesday!

The good news is that I was able to get a lot accomplished. The new trading system is up and running and more importantly, I'm happy with it. I was also able to spend time evaluating last year's performance and reading member feedback via the annual membership survey in order to set new priorities, put some changes into effect, and set new goals for 2009.

The bad news is that to get everything that I really wanted to get done, I would need at least another couple of weeks. I'm sure many of know the feeling. After all, who of us has just enough time to get everything we want done in the time we have, right? That's what priorities are all about and getting started on the new year is at the top of the list. And, as bad timing goes, I'm now fighting the flu bug today so, ready or not, sun or shine, back to work I go!

Following my decision one year ago to concentrate my focus back on trading, it was a good but not great year overall for my trading portfolio. Up +11% in any year is not something to be especially proud of, though I'd be the first to admit given market conditions I could have fared far worse. I know many of you outperformed much better than that and if you managed positive returns in 2008, you should feel quite good about the year.

As I've said, lucky timing (for example, being out of the market and long treasuries due to my family's transition to Utah this summer and fall versus my personal views) helped my performance significantly in 2008. While there were many, the biggest mistake I personally made last year was not being more aggressive on the short-side, especially in the fourth quarter once we had a confirmed downtrend cycle. As they say, you have to take advantage of trends in both directions to do extremely well and I didn't take full advantage.

The best improvement in my trading is that the mistakes I made were fairly self-contained. For example, I had no loss greater than -19% in my portfolio for 2008 (in fact 86% of my losing trades were closed at less than -10% below my cost basis which is an improvement). While my loss/win rate was worse this year due to increased trading and higher market volatility (only 71% of the trades I made were profitable versus a much higher rate in previous years) the fact that I kept losses and mistakes I made small were key. Please keep in mind that my trading results have not been independently verified, but when they are I'll share the full track record with members.

For 2009, my focus will again remain on putting trading first and foremost (of course, after God, family, & health) and work on improving the value of your membership. I very much appreciate all of those who took time to provide feedback in the membership survey and I think I have a good plan in place to improve your experience here. Here are some of the key (but not all) of the improvements that will come in 2009:

• Trading Room: some of you want more "real-time" access to my thoughts and observations throughout the trading day. In 2009 I'll be adding a "trading room" feature to the members' only area that will provide you access to me on a more real-time basis. While the same kinds of posts I've done in the past will continue, for those who desire to know what I'm thinking and doing throughout the day short "twitter-like" mini-sized posts will be provided

• Improved End-Of-Day Newsletter: A few improvements will begin today and others will be added in time. You'll first notice a new section that provides three things - trend (up, down, flat), market condition (overbought, oversold, neutral), and bias (bullish, bearish, neutral). I will update these as needed and they will be in alignment with my daily commentary/analysis. Also, you'll soon see another new section called "three to read." I know many of you don't have time to read all of the links I share, so every trading day I'll pick out three that I personally think are important to read and worth your time. Finally, I'm also narrowing the ticker symbol watchlists to encourage you to actually look at stocks showing up among these lists. They are there to help you stay on top of the market and look for new opportunities, even if you're not a full-time trader

• RIP Timing Indicator & Retirement Portfolio: they weren't helpful to most and it was poor execution and delivery on my part, so they have been removed. For timing, bias, and overall direction - these things will be provided in the end-of-day newsletter instead. As for retirement portfolios, we'll cover more of these in 2009 that will be of help to those looking for more buy and hold strategies to consider as well as timing techniques to apply to them in 2009

• No More Polls: it's clear from the feedback that two things the majority of you do not like are polls I've conducted and the contest I provided concerning members' top picks. So, both are gone in 2009. You've spoken and I've heard you!

• Stock Screen Machine: the best thing about 2008 was that all of us which develop and use stock screens was able to find out how those strategies performed in one of the worst period of market history. If you've done your job, this period has at least shown how bad it can get and how much these strategies can suffer during the worst of times. For 2009, I have a four point plan that includes more screens, more filters, better tracking, and increased performance. I've been working on this for the majority of last year and you'll see those improvements come to fruition in 2009

• More Charts: Many of you wanted more charts to view along with my analysis. As a goal, throughout the month I'm hoping to provide chart analysis on the majority of stocks currently found within my screens in order to offer additional insight.

• ETF Focus & New Tool: I've already begun sketching out the design of a new tool to help those of you who trade ETFs exclusively. While I can't provide details on this quite yet, I expect this to become part of the website sometime before the second half of 2009. As I've said, I've been trading ETFs more and more and this tool hopefully will be of some help if that is your desire as well.

• Website Makeover: While not high on the priority list, we're overdue for a bit of a website makeover which will enable some new features I have planned and take care of some of the issues reported by members in the membership survey.

• Mentorships, Private Consultations, & Utah Mountain Retreat: One of the things I missed most about 2008 was that I no longer was in the position to help members on a one-on-one individual basis. So, I'll be offering both private one-hour consultations and mentorships (although limited in number) at an additional cost for those who desire to take advantage of those opportunities. I will also be offering the first Utah mountain retreat where I'll work with members in a small group and bring in special outside experts to offer their own insights as well. Much more on this later.

• Higher Membership Dues: Just kidding! There will be no membership hikes for 2009. While 97% of you think your membership is worth far more than the $50 per year fee I charge (according to those who took the annual membership survey), I plan to keep minimum dues the same for yet another year. (Fortunately, many you contribute more than the yearly minimum which also helps.) Hopefully the other features I offer (i.e. mentorships, private consultations, retreat) will provide enough funds necessary to do the upgrades I have planned for the coming year. The fact is that if the market doesn't rally as much as everyone hopes and now expects in 2009, interest in websites that focus on the market will see less interest and financial support. Although my membership continues to grow at a healthy clip (up over 20% again last year), it would ridiculous to believe that will continue forever especially if rough market conditions continue.

So, all in all, I'm excited about the opportunities 2009 will offer both you and I as I put these changes among others into action. 2008 was very much a transitional year in so many respects for me both personally and professionally and it is with the utmost sincerity that I offer this word of appreciation for you. After all, your continued support makes this website possible and one of the more enjoyable things that I do. Thank you!

Remember the McClellan Oscillator I've talked about in the past? Here's how it looked as of this morning:

Or, how about the T2108 (% of stocks above 40 day):

Among several others, these two explain my "extreme overbought" comment in the premarket post. Frankly, if the market were simply able to pull back a little (without too much technical damage) and not fall completely apart in these overbought conditions, it would be a positive sign.

Fighting the great bear market of 2008 has left many a scar on investors' portfolios. And for many, it has been especially painful to review the full-year performance data if you've been brave enough to do so yet. In my experience the vast majority don't really come to terms to how they really performed until they have to do their taxes, but the best investors and traders know where they stand at all times.

Needless to say, in both good and bad times we must always take a moment to review our performance so we can learn and improve. But, more importantly, we also have to learn to leave the past in the past where it truly belongs.

While it is human nature to dwell in our past mistakes and success, doing so is not helpful and we must resist the urge to waste time in such endeavors. For example, if 2008 was a bad year for you the loss of confidence can create a huge hurdle to overcome this year. Many investors will never be able to overcome it and I've personally seen more traders than I can count never come back following a very tough year. All of us, especially those of us who make a living in the market, will tend to dwell on our mistakes more than our success. To a point, that can inspire change and inspire innovation and new dedication, but for others it can and often destroys them. Those who win in the market long-term must face this challenge head on and overcome it.

For some of you, the opposite is true. If you've had a great year in 2008 (and I was extremely pleased to discover from my annual membership survey that many members did), overconfidence and hubris can equally present an enormous challenge and lead you into big trouble. Already I've received a number of emails from people boasting about their performance in 2008. Frankly, I've never seen one good trader engage in that type of activity. Instead, good traders put the past where it belongs and focus their time and attention on what matters the most - making the right decisions right now for their portfolio. Those of us who've been around the block a few times have already learned this and you will as well in time if you haven't already.

In the end, no matter how 2008 was for you, it's time to put it away and focus on making 2009 the best year ever.

We start of the first full week of January with negative premarket bias following last week's impressive advance and Friday's upside jumpstart to 2009. Extreme overbought conditions are currently in place.

The top focus once again remains in Washington as President-Elect Obama and congressional officials are crafting a $300 billion tax cut and Fed officials endorse big stimulus to battle the recession. The dollar is very strong today versus other major currencies.

Premarket gainers: YMI, ISYS, OCNF, MU, EGLE, DRYS, JASO, TASR, XNPT, ATHN, NM, HMA, EXM, GOLD, AMZN, AAPL, ARTC, & TBSI.

Premarket losers: BGR, GGP, ES, SBAC, IAG, RBS, DAI, GRS, VSEA, SAY, HOLX, BIDU, DB, FRE, SNY, CBY, BCS, F, JPM, FNM, SLW, MT, & REP.

We have a lot of data this week leading up to another jobs report on Friday. For today, focus will be on motor vehicle sales and the 10:AM report on construction spending. Congressional hearings into Madoff also begin today. That said, Wall Street strategists are very bullish on the market's prospects in 2009. According to Bloomberg, analysts predict the S&P will rise +17% in 2009.

Upon the first day back, I will have several posts today at the members' only website to offer performance data for last year along with a special post this afternoon that will outline priorities for 2009. Let's all make 2009 a great year!

For the remainder of 2008, I'll be away from the trading desk to spend time with family and for thoughtful reflection upon the new year ahead. I will return on Monday, January 5, 2009. Until then, may you and your family have a very Merry Christmas!

As managing member at the Capitalist Pig Hedge Fund and a regular contributor to Fox News Channel's Cashin' In, Fox Business Network's Cavuto, and WLS (AM) 890's morning show, Don Wade & Roma, Jonathan has established himself as one of the more popular and highly-respected personalities on television. His book, "The Capitalist Pig Guide to Investing" has been on my recommended reading list and he has been a frequent commentator in the financial press including a weekly "must read" column at Smart Money. Some of his latest articles can be found here.

It is with great pleasure that I share this Q&A with him.....[READ]

Good morning. Premarket futures are slightly higher after Bush announced a $13.4 billion dollar low-interest loan from TARP to the automakers with an additional $4 billion in February.

Beyond the auto bailout, investors will also be watching the reaction to earnings from Research in Motion and Oracle as well as how currencies trade after Japan's central bank cut its target lending rate to 0.1%. The S&P also cut ratings on 12 banks.

Premarket gainers: GM, F, ZQK, PBKS, LIHR, UAUA, NEXM, FBC, PWAV, CSUN, EGY, ADLR, COMS, DRI, MFE, ORCL, NLY, JDSU, ASML, RIMM, DW, SIRI, & MNKD.

Premarket losers: CLDX, DVAX, IPI, AUY, CADX, PDLI, PALM, CDE, KMX, RAD, SU, GTE, CY, GFI, DGI, RBS, RTP, POT, SLW, MT, GNW, MT, HBC, AAUK, & ALVR.

Heading into the final trading days of 2008, we have a relatively tight trading range to keep an eye on between Monday's lows (S&P 860) and highs (S&P 910). In fact, a little more weakness today (so long as the declines are limited) would be a positive development to set up a bullish tone for the rest of December. Today is also quadruple witching day and many traders (myself included) are closing their books for the year.

Go make it a great day!