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.

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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