The Kirk Report

No Upper Hand

The bulls seemed to have control over the tape this morning, even though every upside move was hit with an equally strong selling wave. Then, in the afternoon the power seemed to revert back to the bears and we closed out another trading day at our lows.

Despite oversold conditions, the bulls couldn't rally them. I'm sure you can blame the PPI or the energy fallout led by Exxon Mobil's (XOM) reversal, but at the end of the day neither side seems to really have the true upper hand. Until that is made clear, we've got to tread very carefully. Like I said this morning, I really desire to put money to work, but at the same time, I'm in no mood to gamble.

As always, I hope you're holding up well in spite of this challenging tape.

I-Watch

A common question I receive is how I watch what the elephants (i.e. institutions) are buying and selling on an intraday basis. There are quite a few tools I use to accomplish that, but one of the better free tools available is Thomson's I-Watch.

Here is a graphical representation of today's trading environment:

Focus Charts

Some of you have requested that I share a few stock charts I find noteworthy. So, as requested, here are three charts I've been focused on recently (12 additional charts can be found at the members' only website's stock screen page):

Significantly Oversold

As usual, Helene Meisler at RealMoney earns her pay this morning by providing readers with two charts that currently show how significantly oversold we are. Based on her technical analysis of the market, Helene believes that "all signs suggest the market is in the last leg of the decline." Just something to think about as we navigate the next few trading days.

Profits & Inflation

Good morning. Two topics will be the focus today - profits and inflation.

This is a relatively big day for earnings reports as quite a lot of closely followed firms release their numbers and guidance. At the top of the watch list include the likes of IBM, 3M, Intel, Yahoo!, & Motorola. So far, there haven't been any major profit surprises, but that doesn't mean there won't be over the next few days. Overall, earnings reports have been relatively good.

On the inflation front, the September PPI showed that energy prices are indeed causing an inflationary spike. While this data is far from surprising, investors still have to figure out whether companies can pass on their higher energy costs quickly to consumers without hurting profits and also whether consumers are resilient enough to adapt easily to those higher costs.

As for the market, we've just booked two solid days of upside gains so continued strength will certainly cause some to rethink their bearish positions. Premarket futures are relatively unchanged and I think my heavy cash position is too conservative.

Have a profitable day! I'll be back a little later with some charts to share...