The Kirk Report

Swimming With Alligators

What an ugly day, unless of course, you were loaded up short at the opening bell. Between institutional program trading and the hedge fund maniacs, trading this market is like swimming with a bunch of alligators.

There's not much to spin positively about today, so I'm not even going to make that attempt. The market just seems absolutely void of any buying interest and if I were short (which I am not), I'd be feeling quite smug at the moment given today's turnaround to the dark side. Still, the true test will come when the market reacts to earnings. Gun to head (and it is a working thesis at best), is that I think we should prepare for a inevitable breakdown, but one that is only temporary in nature.

As for the big picture, I suspect were in for some more sideways torment. As a trader, that is the worst case scenario versus another protracted move to the downside. If we trend lower, I can take advantage of that trend. This back and forth movement can chew up even the best of traders.

As always, I hope you're navigating the market's twists and turns well, and if you're not, just realize that nearly everyone I've talked to lately is far from having the best of times. Like life, sometimes it is a struggle. It is meant to be that way. If this game were easy, I'd wouldn't be doing it. Have a great evening & I'll see you back here tomorrow!

The Cheapest Large-Cap Stocks

One of the benefits from running so many of the same stock screens, is that over time you'll pick up on trends that you would otherwise not notice unless you ran the same screens over and over again. This afternoon I took another visit to MSN's stock screener to find the cheapest stocks of large, growing companies. The results aren't as interesting as the fact that there are so many international ADRs on this list. I don't believe I have ever seen such a strong representation there.

Looking For A False Breakdown?

As I see the market gets hit with a steady dose of supply this afternoon, I'm left wondering how many investors are waiting until a breakdown of this sideways trading range to sell. I know investors have turned bearish if the sentiment surveys are true, but how many will sell if and when that bottom support breaks down? Perhaps we'll see a false breakdown, like the bull-trap breakout we saw early last month just to throw everyone a curve ball? Just something to contemplate as we prepare for the earnings deluge.

LaserCard

For a $6 stock, LaserCard (LCRD) continues to garner a fair amount of attention by Wall Street analysts. It is unusual to see so much interest as well as high expectations for a little-known company.

However, in this case, I completely understand why there is so much interest surrounding LaserCard. The company is a leading maker of optical memory cards, chip-ready smart/optical cards and advanced-technology secure ID cards. While that may not excite you, if you think the U.S. is going to make passports more secure and/or place new more stringent requirements on state driver licenses, LaserCard stands to profit tremendously.

Still, even with all of the analyst praise for LCRD, the stock is stuck in a downtrend. I would also like to see much more volume to indicate serious accumulation is underway other than just Wall Street talk. As you know, talk is cheap and even though a starter speculative position could be right for the risk tolerance and patient (which is what I've done by the way in my retirement portfolio), I still wouldn't buy a truckload until we see the stock prove to us that it really has the muscle to move up, up, and away!

My Home Office

One of my goals this summer (beyond making a killing in the market), is to finally put our new home together (i.e. organize, decorate, buy furniture, etc.)

As many of you remember, we moved last July and even though we've been here for 10 months, we've done very little to actually settle in and make it a home. It isn't entirely my fault. My wife works full-time as a high-school Spanish teacher and for the past couple of years, she has also been a full-time student in a Ph.D program. Since I work +60 hours per week, it is difficult to find the time. I'm sure many of you understand. I can't imagine how some of you manage to do it with children running around!

Part of that goal also includes setting up my home office in the way I would like it to be. In the few free hours I have, I've been researching things like graphics cards, flat-panel mounting solutions, to multi-screen displays. Unfortunately, I have yet to find a desk that meets my needs completely. I may have to go the custom route, but that tends to be far too expensive.

If you're a serious trader and work at home, and would like to share your tips on building a perfect trading setup, I'd love to hear your thoughts. In fact, if you care to send me a digital photo of your current setup, I'd really like to see it. With your permission I may even post your photo in a followup post. Hopefully, by the end of summer, I'll be able to share a photo of my home office!

Investopedia

As you can imagine, I receive a lot of email and some of the questions I receive routinely border on the ridiculous side. I think some readers like to play "stump the chump," figuring they'll ask me a weird question just to see what my reply may be just to have a little fun or test my market intelligence. It comes with the territory I suppose.

Truthfully, it isn't all that difficult to stump me as I'm not an expert about everything in the market. However, when I don't know something I think I should know, one of the first websites I start at is Investopedia.

Their search engine is one of the best I know if you're looking for some investment or trading related term you've never heard of versus doing an ordinary search on Google. For example, last night one reader asked me to define what is known as a crack spread. Having absolutely no idea what he was talking about, I did a simple search at Investopedia and found that it is a spread created when purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. Sure, I could act like a know-it-all and just reply back with that info, but that's not what I'm about. VISIT

The Battle Continues

While the bulls and bears fight for control, I'm taking a big yawn this morning as I watch this tape. We have some buyers in consumer staples and airline stocks this morning, but not much else. One positive sign is a number of reflective bounces in some of the momentum names, but given the pressure they've seen of late, I'm not so sure that provides an "all clear" buy signal. At least not yet, anyway.

My Trading Radar & More

• A very timid start as the herd looks dazed and confused. CHCI, ELTK, ORCT, KOSP, ENWV, NICE, FARO, WYNN, VRYA, OTIV, CHTT, BOOM, CPKI, NMGA, ALDA, SIVB, & DECK are a few of the stocks I'm tracking (but not trading) this morning


• DOE reported crude oil inventories of +3.6 mln brls vs +400k barrels exp


• The former chief of AIG gave wife $2 billion in stock


• Bill Nygren on The Hunt for Intrinsic Value


• Ike Iossif provides a technical look at the market


• China Unicom (CHU), Cooper Tire (CTB), Covenant Transport (CVTI), Lihir Gold (LIHRY), & Sappi (SPP) are five book value bargains


• Desperate times call for stupid decisions? General Motors decides to add more logos to its car fleet


• Rising steel prices force changes in construction plans


• The entrepreneur's guide to the business cycle


• One pound of learning requires ten pounds of common sense to apply it


• Deadly flu strain shipped worldwide


• Mark Hulbert defends the analysts, even though they keep misfiring on sell ratings


• If everyone thinks Pfizer is a buy, why doesn't the stock go up more?


• Supermarkets are using fingerprints as payment


• The last cell phone market? 9-year-olds


• Heavy insider selling at Sears Holdings (SHLD)?


• Belkin recommends that investors do drugs and have a beer


• As global imbalances mount, the world goes into the danger zone of global rebalancing


• Two new reports show that the number of consumers who plan to pay Federal income taxes with a credit card will increase significantly this year


• Do you see that hammer in eBay (EBAY)?


• Sam Stovall sees healthcare stocks that have legs


• Dream lofty dreams, and as you dream, so shall you become


• The Sivy Seventy is a group of a very nice companies, but are any of these stocks really undervalued?


• The Investor's Intelligence survey shows 46.2% bulls (down from 47.9% last week) and 29% bears (down from 29.2%)


• Fifteen current and former traders at the NYSE were criminally charged yesterday with cheating investors out of the best prices for their stock trades


• Woman won't sue Wendy's for alleged finger


• Energy is up & Bush's approval rating is down


• My money is on Tana to win The Apprentice


• Many, but not all CEOs rake in rewards that are not justified


• The nature of risk by William J. Bernstein


• Life is change - nothing can ever be the same a minute from now as it was a minute ago


• Jim Puplava and the investment constant


• Despite housing boom, Warren Buffett still resides in a gray stucco home he bought in 1958 for $31,500


• Lots of people are asking my opinion on buying the airline stocks. As some of you know, this is one sector I try to avoid like the plague


• National housing values by local markets


• Take care of your losers because the winners will take care of themselves. lf you want to sell some of your stocks and not all, in most cases it is better to go against your emotions and sell the stocks first with losses, then small profits, the most disappointing performers and work your way up from there.


• The energy ties that bind India & China


• Past business leaders - where are they now?


• Earn $1 million dollars and pay no federal tax?


• "At first, dreams seem impossible, then improbable, and eventually inevitable." - Christopher Reeve

Traders Look For Confirmation

Good morning. It's another hump day as the bulls prepare for a stream of earnings reports. Tonight we have the most loved stock in the universe - Apple Computer (AAPL) - reporting results.

Just a quick scan of the headlines this morning, and I can see that the bulls have relatively few things to hang their hat on. For example, we have some well-known favorites like ImClone Systems (IMCL) & Harley-Davidson (HDI) on the chopping block after providing bad news. In addition, March retail sales came in at +0.3%, which is below expectations. One of the only pieces of good news out there is that crude is now trading at $51 per barrel, but even that doesn't do much to inspire the rank and file after everyone is loaded up on energy and oil stocks at the moment.

Still, we know from yesterday's action that the market is looking for signs that the bad news is already priced in, at least on the inflationary front. Whether earnings will cooperate is a completely different story, one that is going to play out and affect the market significantly over the next few weeks. Skittish traders want to see confirmation that a firm low has been put it, and until we break through last week's highs, many will continue to treat any rally suspect.

As always, I hope you're trading well and having a good week so far.