Klein Market Summary-September 30th, 2013

Klein Market Summary

September 30th, 2013

Current Market Facts:

Technical Status

Confirmed Rally – Beginning Week 13

Other Observations

NASDAQ pauses at highs

S&P 500 and DJIA have retreated

Leadership remains robust

Feel of the Market

Short-term market focus is the debt ceiling

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3700

3782

3800

Nasdaq 100

3200

3230

3249

S&P 500

1680

1692

1729

 DJIA

15000

15258

15288/15700

Market Interpretation:

The markets have paused as most leaders continue to surge.  Debt ceiling negotiations are in focus this week.  In coming weeks, earnings will return as the focus of the market.  In my opinion, the debt ceiling quibbling in Washington is a non-issue.  Neither party wants to look bad ahead of next year’s elections.  Thus, while both parties must appear to stand pat, neither will risk acting in a way that is not popular.  Thus, the action of the leading NASDAQ continues to confirm what the leading stocks are saying, that the Bull Market is still on.

Joel’s Take:

In recent years, with an unusual level of stimulus in the markets, it has often made sense to try to hold leading stocks through minor corrections.  While it is critical to follow a set of rules that are based on the way that the market and stocks actually work, it is also important to recognize what is working in the current market environment.

The Fed stimulus has stimulated higher markets with the absence of the usual emotional components that accompany market cycles.  This has made it more difficult to use market timing rules that have worked with tremendous success for many decades.

Finally:

In 2006, Keith Klein, my brother and an employee at the time, originated the idea of a periodic market review.  Shortly thereafter, the Klein Market Summary came to be.  It has been published every week since May 2006.  In this summary, we have identified many of the best market stocks at the beginning of enormous moves.  The KMS identified Research in Motion, Baidu, Intuitive Surgical, and Crocs in 2006 and 2007.  In 2009, it identified AAPL and BIDU before their enormous moves occurred.  In the past year, we have dialed in on the very best leading stocks.  I have always approached the market through a probability-based perspective when writing the market summary.  During that period, I have received overwhelming responses from readers who achieved enormous gains on their own, using the KMS as a tool.

Regrettably, today’s Klein Market Summary will be the final issue of this weekly release.  It has been a privilege and an honor to share my thoughts with you, and to interact with many of you.  I wish all of you continued investment success, and urge you to persist through the difficult endeavor of beating the markets, and taking your fate into your own hands.  While making money in stocks is not easy, it is an irreplaceable set of skills that brings an enormous amount of confidence with it.

If I had to identify the one trait that all successful investors have in common, it is that they had innumerable chances to quit, yet they persisted anyways.  I have also found it profoundly important to identify and fixate on only primary data and indicators.  I learned from Bill O’Neil the terrific depth of knowledge that can be gained by directly embarking on market research – even if it duplicates that of somebody else.  Please enjoy a prosperous fourth quarter.

Truly,

Joel T. Klein

 

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

Klein Market Summary-September 23rd, 2013

Klein Market Summary

September 23rd, 2013

Current Market Facts:

Technical Status

Confirmed Rally – Beginning Week 12

Other Observations

Indices distribute on Options Friday

Leading stocks continue to surge and break out

Feel of the Market

Fed stands pat, Summers backs away from Chairman position

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3700

3775

3800

Nasdaq 100

3200

3225

3249

S&P 500

1700

1710

1729

 DJIA

15304

15451

15700

 

Market Interpretation:

The markets have trended higher.  The delay of the Fed’s tapering was Bullish for stocks, last week, as many surged higher.  Still, Thursday and Friday’s weakness added some uncertainty to the equation.  Also, weakness in some leaders recently, especially QCOR, KKD, SSYS, and XONE, may add more confusion to market interpretation.

For the best market barometer in the current environment, I rely on the most liquid leading stocks, some of which have top notch earnings growth.  Others, such as BA or HD, are must-own stocks for large institutions because of their fundamental stories.  Of the stocks showing recent weakness, none are institutional favorites.  The core leadership that has dominated throughout the year remains intact.  Though many stocks have built bases in recent months, others have continued to extend.

Joel’s Take:

The market action of Thursday and Friday may carry over into the beginning of this week.  Still, without a high level of Distribution, and corresponding weakness among the market leadership, there may be little reason to sell.  With stocks like YHOO, GOOG, and PCLN firming up, the theme of the leadership is still consumer tech.  Additionally, biotech stocks have broken out in recent weeks.

With leading stocks, FB, LNKD, CELG, GMCR, among many others, seeing PE expansion, we are in a different market than recent market rallies.  This market is seeing PE expansion in leaders, the leadership is driven by innovative growth stocks, and the leadership is seeing broad institutional accumulation.  While the market may see some pullbacks in coming months, there may be little to stop the rally in the near future.  Coming weeks will bring earnings season which is always a mix of opportunities and threats.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

Klein Market Summary-September 16th, 2013

Klein Market Summary

September 16th, 2013

 Current Market Facts:

Technical Status

Confirmed Rally – Beginning Week 11

Other Observations

NASDAQ has hit new highs

Leadership continues to trend higher

Feel of the Market

Fed tapering may begin shortly

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3694

3722

3732

Nasdaq 100

3149

3178

3189

S&P 500

1627

1690

1700

 DJIA

14760

15381

15658

Market Interpretation:

The NASDAQ confirmed that the uptrend has been intact, as leading stocks have demonstrated, and recent breakouts have confirmed in recent weeks.  While the S&P 500 and the DJIA continue to lag, remaining below early August highs.  Consumer tech stocks have continued to thrive, with other groups adding leadership to the mix.

Whether this recent leg of the uptrend will last a few weeks or sustain itself longer remains to be seen.  This past week has seen the market continue to evaluate Syria and tapering as non-events.  Though there may be bumps in the road, the market will continue to evaluate these two headline items, along with employment data and GDP growth, until earnings season reignites again in 4 weeks.

Joel’s Take:

It is important to recall the context in which most leading stocks are moving.  FB has just emerged from a first stage base.  LNKD, NFLX and TSLA have emerged from second stages.  Others are emerging from 2nd or 3rd stage bases, for the most part.

Twitter made its initial filing for its IPO.  This is another strength for the market, adding more potential leadership.  Chinese internet stocks have come on strong in recent months.  Large cap US tech stocks like AAPL, GOOG, and YHOO have firmed up, giving further evidence of institutional accumulation.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

 

Klein Market Summary-September 9th, 2013

Klein Market Summary

September 9th, 2013

 Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 10

Other Observations

Indices have held support, continue to digest recent gains

The leadership points higher

This pause has been tightly confined on NASDAQ

Feel of the Market

Syria and tapering have taken center stage

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3574

3660

3694

Nasdaq 100

3053

3133

3150

S&P 500

1627

1655

1666/1700

 DJIA

14760

14923

15658

 

Market Interpretation:

This holiday-shortened week was more interesting than the prior sleepy week.  With the NASDAQ seeing accumulation on Tuesday and Wednesday, Friday’s interesting action cannot be fully interpreted for another session or two.  However, there are consistent signs of support on the market indices even as leading consumer technology and biotech stocks have continued to trend well into new high ground.

Friday saw a sharp price break in the markets the permeated most of the leadership.  However, support was found within minutes as the NASDAQ fell 54 points, or 1.5% in 30 minutes, and then quickly recovered to a higher high.  However, the indices faded late in the day, as the S&P 500 failed to clear its 50 Day MA and the DJIA remained under 15000.  The major indices closed flat on the day on big volume.  The action was probably support and accumulation.  However, there was also evidence of selling as the indices peaked mid-afternoon.

If the indices trend higher in coming sessions, Friday’s action would be interpretable as accumulation.  However, if Friday’s lows are retested, then I would conclude that there is still a substantial level of supply at current market levels.  This remains a news-sensitive environment as major world events unfold.

Joel’s Take:

Leadership continues to rise, with QIHU pushing ever into higher ground.  I remember considering the theme of the 2003 Bull Market, at the time.  That market, like most in the past decade, was a recovery rally.  It was not a rally that resulted from expansion or growth, but rather it followed a major correction.  The predominant theme of the leadership in 2003 was Consumer Technology, as leaders like EBAY, SNDK, RIMM (now BBRY), and TASR made huge moves.  Consumer technology remains the theme today.

It is important to reflect on the week-to-week variations that occur in the markets.  Yet, as I reflect on historic growth, this consistency makes complete, logical sense.  In the 1880’s railroad stocks began to move.  They continued to be important for more than 30 years, in the stock market.  However, when they ceased to be important, it was because they were superseded by auto manufacturers, and their suppliers, and subsequently aviation stocks.  Still, today BA and TSLA remain innovative in these fields.

The internet has really only existed commercially for 20 years.  For most people, the internet has been a way of life for a much shorter period.  It is not surprising that the same consumer tech theme has remained in place for a decade, and will likely continue much longer.  Consider that FB, one of the only liquid tech IPO’s since GOOG, is only just seven weeks into its move.  Using recent precedents of GOOG, AAPL, DELL, BBRY/RIMM, CSCO, MSFT and AMGN, FB may move for quite some time.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

 

Klein Market Summary-September 3rd, 2013

Klein Market Summary

September 3rd, 2013

 Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 9

Other Observations

DJIA and S&P continue to correct

Leadership is still resilient

The rally seems likely to continue

Feel of the Market

Syria and tapering have taken center stage

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3574

3590

3694

Nasdaq 100

3053

3074

3150

S&P 500

1627

1633

1700

 DJIA

14760

14810

15658

Market Interpretation:

         Last Friday’s sell-off came on lower volume, ending the week near recent lows.  Tuesday’s action showed weakness, as indices dropped on increased volume.  This followed the stalling action seen Monday.  Still, the NASDAQ Composite remains 2% off highs.  Leading stocks have continued to show unrelenting strength.

The fear of U.S. involvement in Syria has created ripple effects throughout the markets.  There is a only small possibility that the crisis will spread into a regional contagion.  However, the market’s pause seems to be pricing in the worst outcome in Syria.  Furthermore, the Fed’s tapering of its Quantitative Easing program is also a widely expected event.  With regards to tapering, the market may be waiting to see if the ending of that program will lead to economic slowing.  This shortened week may be eventful, as these headlines continue to unfold.

Joel’s Take:

The market continues its pause.  On the NASDAQ, it seems to be moving sideways, while the S&P 500 and DJIA are correcting more typically.  As September events unfold, my focus will be on the action of the NASDAQ Composite and the NADSAQ 100, as well as the action of liquid leading stock.  The best stocks have continued to trend higher, defying the possibility of correction, so far.

Housing stocks and biotechs, both leading groups in the first quarter, have faded from the leadership.  However, consumer technology names with stellar earnings growth have taken off.  Lower lows on the market could make me cautious, especially if that was accompanied by high volume price breaks in many leading stocks.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

Klein Market Summary-August 26th, 2013

Klein Market Summary

August 26th, 2013

Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 8

Other Observations

Market has stabilized at support levels

Leading stocks are acting very well

The rally seems likely to continue

Feel of the Market

The short-term correction has seen leading stocks move higher, in many cases

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3600

3658

3694

Nasdaq 100

3070

3124

3150

S&P 500

1659

1664

1700

 DJIA

15000

15010

15658

Market Interpretation:

Last week, the market seemed like it was on the verge of a correction.  Certainly, there was a pullback underway, especially in the DJIA.  However, the leading NASDAQ indices have been outperforming since the beginning of the third quarter.  While AAPL’s heavy weighting on the NASDAQ indices has helped to limit their downside, it also serves as evidence of institutional accumulation amid this pullback.

Currently, there is a moderate level of Distribution on the markets, but the S&P 500 and NASDAQ Composite have not corrected a significant amount.  In a normal rally, short-term corrections tend to correct 4-7% and last 3-4 weeks.  The June correction was more consistent with the historic norm than the last two weeks.  Current action might be best described as consolidation.  It is possible that the indices could stall and form another leg lower, but that seems less likely at this point with surging leadership.

Global stock and bond markets may be at a cusp where money flows could change based on changing Fed policy.  This could greatly benefit the stock market.  If bond market outflows continue, stocks are the most likely beneficiary.

Joel’s Take:

Perspective is so important in the market.  Investors have just survived a very difficult 13 years in the stock market.  Normally, when we have seen stocks that are up 50% or more during that period, we feel that those are really exceptional leaders.  However, historically, every rally has produced multitudes of stocks that have risen several hundred percent and more.

Yet, any time the market enters a solid rally, or stocks begin to get slightly extended, it feels like they are overdone by comparison to the past decade.  Sound trading rules will keep you in leading stocks for the duration of major moves.  Personally, I try not to trade unless a rule compels me to.  I have found that doing otherwise introduces lower success rates into my trading, and ultimately costs me money.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.

Klein Market Summary-August 19th, 2013

Klein Market Summary

August 19th, 2013

Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 7
   

Other Observations

Thursday’s gap down puts the rally and leading stocks under pressure

Distribution levels are very high

Some leaders are showing stress

Feel of the Market

The rally is under pressure
   

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3600

3603

3694

Nasdaq 100

3021

3074

3149

S&P 500

1654

1656

1700

 DJIA

15000

15081

15658

 

Market Interpretation:

The market may be at the beginning of a correction.  With elevated Distribution levels, Thursday’s gap down, and some damage in leadership, any more Distribution at these levels would conclusively put the market into a Correction.  Last week’s action featured the lagging DJIA leading the indices lower, as it plunged through its 50 Day MA on Thursday.  The Dow has lagged during the recent leg up, while the NASDAQ has led.  The Dow was hit hard by CSCO’s and WMT’s earnings reactions, while leader HD gapped down in the handle of its late stage base.

The NASDAQ Composite has shown more resilience than the other indices.  GOOG, which has been trending higher throughout the year, showed cracks this week, as AAPL broke out of a bottoming base with big power.  While AAPL is not necessarily the kind of leader it once was, it continues to exert enormous influence on the market indices.  This has helped to buoy the NASDAQ amidst the broader sell-off.  With the NASDAQ Composite and NASDAQ 100 off a mere 2%, it is difficult to rush out the door with leading stocks, especially when many continue their uptrends.

Joel’s Take:

Major institutional investors, as well as sophisticated individuals, expect Fed QE tapering in the next 6 months or so.  As such, tapering is not a surprise, nor should it be a threat to a rallying market.  Still, after the NASDAQ surged 12% uninterrupted in recent weeks, a 2% pullback is not surprising.

Some leading stocks are showing damaged or broken patterns.  Yet, others are displaying resilience, and even continued uptrends.  Still, if the market continues to trend lower, or market leadership erodes substantially from here, then a more defensive stance would be in order.

There is substantial evidence of resilient leadership, so far.  If the market trends lower this week or shows more Distribution, without signs of support, a more defensive posture might quickly be adopted.

Leading Stock Notes:

The proper analysis of current leadership for signs of topping is critical at this point.  For example, PCLN gapped up on earnings and then pulled back last week, filling its gap.  This action is not necessarily consistent with a top.  Furthermore, the stock is 15 weeks out from a long-term basing pattern.  Most leading stocks run a year or more from such a breakout.  BBRY ran similarly from its breakout in 2006 until it topped in late 2007.  Even so, PCLN’s action could develop into a base.

The action of CREE last week was quite disconcerting to me, as it gapped down and corrected 26% in 2 days.  CREE has been one of the best liquid leaders this year, up 124% before it cratered last week.  Other green energy plays showed weakness as well, CSIQ, SPWR, and SCTY.  TSLA pulled back hard ahead of the market weakness, but interestingly held steady amidst Thursday’s market plummet.  A few leaders seem to be constructing sound bases, which could add new fuel to market leadership.

  • The Klein Market Summary is a professional interpretation of the general stock market conditions that is updated on a weekly basis.  Joel T. Klein is the portfolio manager of the investment partnership Blue Diamond Capital, LP. He writes the summary using select technical and fundamental data.  The Klein Market Summary is not intended to provide investment advice of any kind, and is only provided for the entertainment of the reader.  It is typically updated Monday morning, weekly.  Please e-mail info@kleinasset.com, if you are interested in receiving this free weekly update.
  • Past performance is not a guarantee of future results.  Due to market volatility, a fund’s performance may fluctuate.  Current performance may be less than previous results.  An investment a hedge fund when redeemed, may be worth more or less than the original cost.  Information above is not a replacement for the Fund’s prospectus.  This webpage does not constitute any kind of offer or solicitation.  Additional information on investment objectives and policies is in the Fund’s prospectus.  Ask your representative for a prospectus.
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