Archive | September 2012

Klein Market Summary-September 24th, 2012

Klein Market Summary

September 24th, 2012

Current Market Facts:

Technical Status Confirmed Rally – Beginning Week 9
Other Observations Tight weekly closes on the indices

Leaders continue to trend higher

Feel of the Market Still under solid accumulation

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3134

3180

3200

Nasdaq 100

2800

2862

2900

S&P 500

1400

1460

1500

 DJIA

13338

13579

13653

Market Interpretation:

The indices showed tight action last week.  Most leading stocks have continued to show signs of accumulation.  The markets have continued to levitate, much as they did in the rally at the beginning of this year.

As key fundamental economic issues remain unresolved, the Fed’s QE3 has begun to inflate stocks and other asset classes.  On the face of it, there seem to be many good reasons why the market should not rise: the election, Europe, China, the Middle East, unemployment, the deficit, etc.  However, the market is discounting these realities, and is under accumulation anyways.  QE3 has provided an opportunity in the market, that might not be there otherwise.  However, even without it, the stock market is trading at a relatively low valuation.

Joel’s Take:

It is hard to ignore the election, and the polarizing politics that come with it.  In U.S. History, there have frequently been times when issues that seem overwhelming have not been addressed – the can was kicked down the road to the next administration.  Usually, while these stalling tactics may not have been good for the country long-term, the short-term environment was stable.

Our country is resilient in ways that are difficult to measure.  So with the return of housing, fueled by the full-throttle stimulus policy of the Fed, there are likely to be positive halo effects.  Since 2010, the strength or weakness of the U.S. Economy is probably best measured by unemployment.  While the headline unemployment rate is above 8%, the Bureau of Labor Statistics (U6) show that when including underemployed people, and those who are not reporting that they are actively looking is 14.7%.  This number is down from a peak of 17% in 2009, and is typically between 8-10% in a healthy economy.  In 1982, headline unemployment (U3) was at 11%.  When tax cuts took hold and the economy accelerated, the unemployment rate eventually dropped to 5%.  The 1982 example reiterates how powerful this economy can be, when it is unimpeded.

  • 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 17th, 2012

Klein Market Summary

September 17th, 2012

 Current Market Facts:

Technical Status Confirmed Rally – Beginning Week 8
Other Observations The markets have broken into new high groundSigns of accumulation still dominate market action
Feel of the Market New breakouts have been emerging

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3134

3184

3200

Nasdaq 100

2800

2855

2900

S&P 500

1400

1466

1500

 DJIA

13000

13593

13338

Market Interpretation:

Last week, the indices continued to rise.  Even after they hit new high ground, the markets were under accumulation.  This subtle, but important distinction, demonstrates that there is powerful demand for stocks.  It shows that institutions are not just buying at support levels, but have the appetite for stocks at and above important resistance levels.

The market remains robust, powered by themes of iPhone 5, Kindle Fire HD, premium retailers, medical, homebuilders, and technology.  The breadth of leading stocks speaks to a strong, durable rally.  Most of the leading stocks are extended, at this point.  New breakouts are not likely to be as powerful as stocks that broke out months ago.

Joel’s Take:

Current headlines don’t look promising: unrest in the Middle East, tax increases, high unemployment that is becoming structural, the election, and Europe.  Yet, the market is moving with power.  In modes such as this, the market becomes forward looking.  The Fed’s QE3 is a policy that is designed to create inflation.  The purpose of this inflation was originally to create demand for real estate.  However, now it is an artificial method of creating wealth through asset classes like real estate, commodities, and most especially, the stock market.  The other very important effect of QE3 is that, by inflating the currency, the national debt is reduced, in real dollars. The ability of this government policy to push the markets higher should not be underestimated.

  • 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 10th, 2012

Klein Market Summary

September 10th, 2012

Current Market Facts:

Technical Status Confirmed Rally – Beginning Week 7
Other Observations Major market indices have broken out of cup-with-handle patternsAccumulation has powered the markets to decade highs
Feel of the Market Continued strength led by housing and suppliers

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3134

3136

3200

Nasdaq 100

2800

2825

2900

S&P 500

1400

1438

1500

 DJIA

13000

13306

13338

Market Interpretation:

The indices broke out of constructive cups with handles last week, led by new highs in stocks such as LNKD, DIS, HD, EBAY and AMZN. The market emerged from a very tight consolidation, which served as the handle in its overall pattern.  Such chart patterns are not necessarily buy signals on the General Market indices, but just serve to confirm the strength already seen.

At this point, a truly powerful rally would continue to see signs of accumulation in leading stocks and the indices, especially after they are trading in new high ground.  The counter point is that many leading stocks are extended and due for a pull back.

Joel’s Take:

This rally is different in character than the one that began at the end of 2011.  That one lacked the broad liquid leadership that is now driving the market.  The current rally is led by innovative leaders, like AAPL and AMZN.  Homebuilders are being driven by a return of demand as well as the lack of capacity for builders and suppliers.  Expectations that the Fed will begin QE3, another mechanism for easing, are putting a lift under this market.  Yet, the quality of the current rally points to more than just that.  When leading stocks like the current ones are hitting highs, major institutional accumulation is the driving force.  Since the market discounts events 6 to 9 months in the future, it is probable that economic conditions may have improved by that time.

The highest probability stocks are ones that are emerging or have emerged from early stage bases, have high levels of liquidity, and therefore institutional support, and also have the best earnings growth.

  • 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.