Archive | November 2012

Klein Market Summary-November 26th, 2012

Klein Market Summary

November 26th, 2012

 Current Market Facts:

Technical Status  Market in Correction – Beginning Week 8
Other Observations The market has risen for several sessions on diminishing volume

Some potential leaders have surged to highs

Feel of the Market Market has recovered substantially on light volume

 

Important Levels on Key Indices:

Index Support Last Close Resistance
Nasdaq 2800 2967 2985
Nasdaq 100 2500 2640 2667
S&P 500 1350 1409 1426
 DJIA 12500 13009 13253

 

Market Interpretation:

As 2012 winds down, the market remains a difficult environment.  Many of the innovative growth stocks that fueled the 2009 Bull Market have topped.  The current market is seeing strength in financials, construction, commodities, and medical groups.

While current events like the fiscal cliff and Europe’s recession continue to play out, the market is poised to confirm another uptrend.   The action continues to be consistent with a late-stage Bull Market trend.  Most of the real leaders have topped, but new stocks are trying to lead.  AAPL has bounced off of the lows of its recent sell off, recovering about one third of the way, as it undercut its recent low, triggering a short-covering rally.  The undercut of 522 on AAPL also paves the way for a base count reset.  While AAPL has seen significant technical damage, it continues to be weighted very heavily on the NASDAQ and the S&P 500.

Joel’s Take:

Our paradigm is not to predict, but to anticipate probabilities based on historic precedents and rules.  As such, it would not be unusual to have another market rally or two before a sustained correction.  However, these rallies tend to lack the innovative stocks that typically power strong Bull Market trends.

Risk management is very important here.  Remaining disciplined will be the best way to filter a real opportunity from a trap.  Many stocks that break out from late stage bases pull back before running higher.  Unless you are seeing significant progress, there is little justification for much exposure.  With the market still in correction, patience is the current mandate.

  • 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-November 19th, 2012

Klein Market Summary

 November 19th, 2012

Current Market Facts:

Technical Status  Market in Correction – Beginning Week 7
Other Observations Continued broad selling has overtaken recent leadersAAPL’s is exerting its weight to the down side
Feel of the Market Fiscal uncertainty is in focus

 Important Levels on Key Indices:

Index Support Last Close Resistance
Nasdaq 2800 2853 2984
Nasdaq 100 2500 2534 2665
S&P 500 1350 1360 1400
 DJIA 12500 12588 13000

Market Interpretation:

Last week’s headlines focused on Europe falling back into recession, initial and continuing jobless claims soared, and the market remained under pressure. With a Washington status quo, there is little uncertainty as to how or whether the parties will work together.  Yet, the combination of domestic issues with global ones suggests a weak economic backdrop in near-term data.  Still, a fiscal solution might yield a positive market trend.

Bellwether AAPL has been pounded for 8 weeks, undercutting the low of its prior base and resetting its base count.  The nature of its selloff shows a change of trend.  Also, AAPL’s recent earnings, sales, and profit margin deceleration suggests that it is time to observe whether another AAPL catharsis can lead to reacceleration, and another eventual uptrend. AAPL is important above and beyond most stocks, because as a leading stock, it is a pure indication of the most intelligent institutional investors, and therefore, perhaps, the best type of indicator of market strength.

Joel’s Take:

By reference to historic models, there is an elevated probability that this correction may develop into a deeper, longer correction.  Whether such action fits a technical definition of a Bear Market or not might be immaterial.  Corrections serve the twin purposes of wearing investors out and scaring them out of the market.  As we consider that the best leading stocks have topped, and the overall trend is late in its fourth year, there is little justification for aggressive investing, even if a confirmed uptrend evolves.

Coming weeks, and perhaps months, will reveal the answers to important questions about the market and the economy:

Are we entering a Bear Market?

Will America follow Europe into recession?

Has AAPL topped or will it reaccelerate and return as a leader?

What could be AAPL’s next catalyst?

Which stocks will become the next crop of leaders, eventually?

How will the fiscal cliff and tax increases be resolved and how will the market receive them?

These are some of the questions that want for answers.  For now, we wait…

  • 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-November 12th, 2012

Klein Market Summary

November 12th, 2012

Current Market Facts:

 

Technical Status

 

Market in Correction – Beginning Week 6

Other Observations The decisive election catalyzed broad Distribution

All major leading stocks from the 2009 rally have topped

Feel of the Market Institutions continue to flee for the exits

 

Important Levels on Key Indices:

Index Support Last Close Resistance
Nasdaq 2840 2905 2984
Nasdaq 100 2500 2583 2660
S&P 500 1360 1380 1400
 DJIA 12500 12815 13000

Market Interpretation:

The market has been in a relatively controlled correction for several weeks.  The last three sessions have seen institutional selling as the market prices in the results of the presidential election.  Tech titans like GOOG, AMZN, and AAPL have been under pressure, forcing the NASDAQ Composite to correct 9% versus the S&P 500’s 6%.  Last week’s election results on Tuesday night were met with broad distribution on Wednesday, and again on Thursday.  Volume backed off on Thursday, but remained strong, signaling that buyers were absent.  Friday saw the markets stall.

The markets look forward, and as such, are sifting through the complex information of Hurricane Sandy’s destruction, the Bush tax cut expiration, Obamacare tax increases, and the debt ceiling/fiscal cliff/sequestration.  In these events, it seems that the best that could be hoped for is that things may turn out better than their respective worst cases scenarios.

Joel’s Take:

There will always be another rally.  With the reelection of President Obama, the markets are looking forward to see how and if the immediate challenges will be resolved.  The market will then likely extrapolate forward on other issues.  So, if the debt ceiling is negotiated higher and spending comes under control, then it might be possible to make assumptions about whether other issues could be resolved, such as the tax rates remaining accommodative to fuel job creation and capital formation, for example.

Current market observations should focus on whether the current intermediate correction develops further into a Bear Market.  With the topping of many stocks that have provided leadership in recent years, this market has become one to avoid.

  • 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-November 5th, 2012

Klein Market Summary

 November 5th, 2012

 Current Market Facts:

Technical Status  Market in Correction – Beginning Week 5
Other Observations Last week’s partial trade saw signs of support

Liquid tech leaders continue to erode

Feel of the Market Election uncertainty and Hurricane recovery

Important Levels on Key Indices:

Index Support Last Close Resistance
Nasdaq 2961 2982 3086
Nasdaq 100 2637 2660 2744
S&P 500 1400 1414 1434
 DJIA 13000 13093 13330

Market Interpretation:

Several pivotal issues remain unresolved:  the election, the recovery from Hurricane Sandy, and the tech breakdown led by AAPL.  There will be ample evidence in coming days about the impact of these items.  The market reaction, as always, is the best mechanism for evaluating the importance of these critical events.  Still, uncertainty can have a paralyzing affect on major market participants, and the market itself.

As the market continues to flounder along lows, an uptrend has yet to be defined.  This remains a market where defense is key.  Medical, construction, and consumer may yield the best opportunities for leadership, at this juncture.  Tech stocks have almost certainly rotated out of the candidacy for market leadership.  This continues to reinforce the hypothesis that current the market action should be construed as a late stage Bull Market.  Leadership might be expected to come from cyclicals, not growth stocks.

Joel’s Take:

Our hearts go out to the victims of Hurricane Sandy.  While this natural disaster will have lasting effects on many of the individuals who were impacted, the effects on businesses and the markets seem to be more fleeting.  In modern times, most New York businesses have disaster plans, data back up, etc.

The election is a wait-and-see situation.  Each outcome brings its own opportunities and potential challenges, with regards to the stock market trend.  The issues surrounding the presidential election are complex and are certain to evolve quickly in coming days.  New trends can begin rapidly, so preparation is key.  Late stage market action often requires investors to take profits more quickly than early in a Bull Market.  Patience must continue to be the guiding principle here.

  • 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.