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:



Last Close






Nasdaq 100




S&P 500








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.

About kleinmarketforum

Klein Asset Management, LLC, formed in 2003, serves individual investors via a directional growth stock approach. When the market is in an uptrend, the firm seeks to exploit investment opportunities. When the trend is down or neutral, assets are protected. Klein Asset Management undertakes major market research projects. In many cases, these result in improved investment methods, which ultimately improve performance.

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