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:
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.
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 firstname.lastname@example.org, if you are interested in receiving this free weekly update.
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