The Kirk Report

No Mojo

If that is what you call a bounce, I'd like to get a refund. That was one ugly afternoon.

The gap open followed by little intraday upside momentum wasn't exactly the kind of bounce so many desired. When the gains started to fade, stops were deployed and buyers simply walked away. In fact, it almost makes you wonder whether the only reason we gapped at the opening bell was due to short-covering or, as the bears would quickly tell you, just a little profit-taking.

Some blame the bird flu headines for the late day sell off, but I personally think that is just a convenient excuse. Mr. Market has lost its mojo and buyers have little conviction. In fact, the buy-the-dip crowd may just be out of firepower as they've done their level best to fight this correction from the get go. Traders continue to hide out in the market leadership groups on the theory that they'll be safe. However, you would think that the recent pullbacks even in those areas of the market would have lowered some of that temptation.

As always, I hope you're keeping everything in perspective and trading well within the volatility. I know how difficult it is to keep emotions out of the game, particularly on a day like today following the past few weeks. But, this too shall pass. Keep your chin up and stay focused. Those who do will be in the right position when it matters the most.

We'll give it another go tomorrow. At least I'm no longer bored by this market. Have a nice evening.

Reversals With Muscle

In oversold conditions, I spend time screening for reversals with muscle. In other words, stocks that are showing strong bounces with supportative trading volume. The reason? I'm looking for stocks that the market elephants are buying.

Nine stocks fitting that specification right now are PEIX, PD, SU, IFN, CNX, GROW, TIE, GLG, and CAM.

Obviously, I'm not making stock recommendations (you know I don't do that) but I am sharing what I'm looking at as we navigate this bounce.

Garden Variety Oversold Bounce

Traders like volatility, but volatility following gap opens is not the easiest of trading setups. Frankly, like many of you I'm struggling to be patient as I track my favorite stocks and keep my eyes peeled for attractive entries. The sectors seeing the most bounce include precious metals, oil & gas, steel, coal, basic materials, alternative energy, transportation, and machinery.

So far this is just a garden variety bounce from oversold conditions. It does not in any way send a green light signal if that is what you are thinking the green on your screens may indicate. If you're inclined to put money to work, don't do it all at once and be sure to remain selective. Some stocks may have reached tradeable bottoms, but more likely than not they'll need some time to form tradable support levels first. That requires much more than a garden variety oversold bounce.

Trading The Gapper

Good morning. A strong rebound in overseas markets and strength in commodities have provided a very positive tone in premarket trading. Tuesday is known for its turnaround potential so let's see how much they can rally us today from oversold conditions. We have the State Street Investor Confidence Index due out at 10:AM and Bernanke is scheduled to testify before a Senate committee on financial literacy.

Stock winners in premarket trading include FRGO, ESCL, BLDP, GERN, PEIX, MGPI, ANDE, OPWV, IFO, HOM, DVW, TIE, ASML, JOYG, BOOM, SIFY, SCMR, EZM, OVEN, PAAS, GROW, DXPE, HANS, REDF, ESLR, AMTD, NTRI, BIDU, RMBS, and QCOM. Noteable losers are FFIV, TTEK, CRDN, EGY, NLY, BKC, JRJC, RAME, GOLD, PALM, JNPR, and PWAV.

Trading gap opens can test your nerves but with oversold conditions we do have the potential for good trading opportunities. What will be most interesting is how the market holds the gains (if they hold them) following the strong open. My guess is that we'll see a gapper followed by some choppy trading action overall. Buckle up and let's go make some trades.