Archive | December 2012

Klein Market Summary-December 31st, 2012

Klein Market Summary

December 31st, 2012

Current Market Facts:

Technical Status  Market in Correction – Beginning Week 13

Other Observations

The market continues to move sidewaysMarket swings based on intraday fiscal rumors, not outlook

Feel of the Market

Late stage Bull Market

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

2950

2960

3000

Nasdaq 100

2600

2606

2700

S&P 500

1400

1402

1448

 DJIA

12900

12938

13000

Market Interpretation:

Whether you think the market is in a confirmed rally or not, there has been little opportunity to profit in recent months.  As the country is poised to fall off of the fiscal cliff, the market continues to trade in a narrow range.  While the fiscal cliff is perceived as a binary event – resolving it is positive, not resolving it is negative – the reality is probably somewhere in the middle.  There will be some compromise going forward.  As is often said of politics, the best negotiation is when both sides are unhappy.

Joel’s Take:

Today brings 2012 to an end.  It has been a particularly difficult year in the market.   We have seen leading growth stocks top, several false positive market signals, and very little upside potential.  The election kept Executive and Legislative leaders in their same roles.

2013 brings the possibility of recession, according to the CBO, a Bear Market according to many money managers, and elevated taxes and unemployment according to just about everybody.  It promises to be a challenging investment environment – opportunity mixed with difficulty.  The Fed is likely to be continue doing everything in its power to make up for a lack of fiscal policy, including a budget.  I want to thank you for reading this year, and to wish you a Happy 2013.

  • 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.
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Klein Market Summary-December 26th, 2012

Klein Market Summary

December 26th, 2012

Current Market Facts:

Technical Status  Market in Correction – Beginning Week 12

Other Observations

Option-driven Distribution dominates recent actionMany leaders have been resilient

Feel of the Market

2009 leadership remains in correction

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3000

3021

3062

Nasdaq 100

2620

2658

2700

S&P 500

1412

1427

1448

 DJIA

13000

13139

13300

Market Interpretation:

The action last week and on Monday’s half session continues to show a lack of conviction on the part of institutional investors.  This is supported in charts, and follows logically.  The short-term economic catalysts, collectively termed “The Fiscal Cliff”, include massive government spending cuts, tax increases tied to Obamacare, and broad income tax increases.  Without knowing how these are going to play out, it makes sense that investors would show patience and restraint in this environment.

Watching stocks like AAPL and BIDU correct, which were among the most powerful liquid leaders from the 2009 rally, tells us to expect new leadership to emerge, if there is to be another sustained rally.  The S&P 500 is probably the best index to focus on at this point, because the NASDAQ indices are dominated by AAPL’s enormous weighting.

Joel’s Take:

This has been a very difficult environment for the growth stock discipline that I practice.  The past year, there have been 7 buy signals, none of which led to a major market uptrend.  To be fair, the Follow-Through that was called in July led to a 4-5% uptrend.  However, that rally was not abundant with opportunity from leading stocks.  Also, the current environment is still deemed a rally by some.

Most investors who I have been in contact with have had a difficult year.  While it is not a time to lose patience, it is a very good time to review and analyze results.  It is also a good time to remain prepared for the next real rally.  While some believe that we are in a rally right now, I have not seen what I consider to be a proper Follow-Through Day.  Leadership in mediocre, so far, and the market seems to be moving sideways, not up.  Historically, this quiet holiday week can produce a buy signal and can have significant activity in leading stocks.  Still, thinly traded markets also produce false breakouts and buy signals.  Patience is the key to survival 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.

Klein Market Summary-December 17th, 2012

Klein Market Summary

December 17th, 2012

Current Market Facts: 

Technical Status Market in Correction – Beginning Week 11
Other Observations Then indices have continued to oscillate around key levelsLeading stocks remain intact
Feel of the Market We remain in a trendless market, so far

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

2936

2971

3000

Nasdaq 100

2600

2628

2670

S&P 500

1400

1414

1439

 DJIA

13000

13135

13329

Market Interpretation:

While many stocks are trending into new high ground, or at least staying close to new highs, the true leading stocks for the rally that began in March of 2009 have all topped.  AAPL, PCLN, NFLX, BIDU, CMG, and LULU have all topped and seen earnings deceleration.  We cannot know whether these stocks will return as leaders, but using them to help interpret the major market trend tells us that the uptrend that began in 2009 is very weak.

We expect the market to react to news regarding economic policies.  There are also many forecasts that the U.S. economy will enter a recession next year.  The outlook suggests a cautious investment approach.  Still, the market should be watched closely.

Joel’s Take:

When investing based on a properly constructed system of probabilities, it is important to recognize that any deviation from the rules of that system, will lower performance.  For example, a low volume Follow-Through Day has never led to a major market uptrend.  Discipline is the most important survival skill in this type of market.

As a money manager and a researcher my focus has overwhelmingly been the major market trend.  Because the probabilities of so many smaller events are tied to the major market trend, understanding that trend is the most important part of stock market investing.  Understanding the nature of market trends helps provide patience and focus during difficult periods such as the current one.  As such, the current environment is not one in which to have significant market exposure.

  • 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-December 10th, 2012

Klein Market Summary

December 10th, 2012

Current Market Facts:

Technical Status  Market in Correction – Beginning Week 10

Possible rally, Week 3

Other Observations

The markets have pulled back from 50 Day Moving AveragesLeadership continues to hold up, as market has paused

Feel of the Market

The status quo Washington politicians are delivering status quo results, so far

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

2936

2978

3000

Nasdaq 100

2613

2641

2679

S&P 500

1400

1418

1424

 DJIA

13000

13155

13290

Market Interpretation:

The market remains in an unconfirmed state, by all highly probable definitions.  While many stocks bounced 2 weeks ago when AAPL came off of lows, it is clear that AAPL is not a leader at present.  Since it has been a leading stock since 2009, and since August of 2004, for nearly every market rally, there is a critical question upon us: Is AAPL still a correct indicator of market direction?  If so, the current market should be looked at a deteriorating one, not an unconfirmed rally.  There is also a negative bias on the NASDAQ indices because of the mammoth weighting of AAPL.  The constrast between the NASDAQ Composite and the S&P 500 is due almost entirely to the 28% decline in AAPL.  Additionally, former liquid leaders like BIDU and are trending lower as institutions head for the exits.

Construction, commodity, medical, retail, and some technology stocks are rallying in the current environment.  Current leadership is consistent with classic late-stage Bull Market leadership – commodities, aging late-stage growth stocks, capital goods and services, and laggards.  While there are several investable stocks that are moving currently, the probabilities of a powerful rally now are fairly low.

Joel’s Take:

No stock can lead forever.  In recent history, several stocks have existed as perpetual leaders.  In the 1990’s, MSFT, INTC, CSCO, GE, and many others rallied year after year, as their long-term earnings expanded, driving huge stock gains.  This happened in many other periods of history with stocks from many industries.  Since 2004, AAPL has been the most consistent leading stock.  However, with the departure of Steve Jobs, and the maturation of two key product lines, iPad and iPhone, as well as a few executional misfires, like maps, the stock is either done leading for the short-term, or is permanently done as a leading stock.

This is just another reason that the current market environment is exceedingly complex.  The major indices are a great filtering mechanism for the relevance of headlines and major economic items.

  • 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-December 3rd, 2012

Klein Market Summary

December 3rd, 2012

Current Market Facts:

Technical Status  Market in Correction – Beginning Week 9

Possible rally, Week 2

Other Observations The market has continued to trend higher

More stocks are beginning to trend higher

Feel of the Market All eyes are on Washington and the economy

Important Levels on Key Indices:

Index Support Last Close Resistance
Nasdaq 3000 3010 3020
Nasdaq 100 2670 2678 2700
S&P 500 1400 1416 1421
 DJIA 13000 13026 13187

Market Interpretation:

Stocks have continued to show improved strength.  With leadership emerging from consumer, medical, construction, and technology, there is yet another chance that the market may trend higher.  Still, without a true Follow-Through Day, the market is in an unconfirmed state.  While this new uptrend may evolve into a confirmed uptrend, it is not one yet.  Even so, leading stocks have hit new highs, in some cases, on big volume.

Late stage Bull Market action is very difficult to interpret and manage.  One key to interpreting the actual strength of the stock market is to rely heavily upon liquid leading stocks, and their actions, for interpretation.  As such, leadership is showing much more strength than the indices, so far.

Joel’s Take:

According to the research that I look at, interpreting Friday, November 23rd as a Follow-Through Day does not conclusively confirm an uptrend.  Certainly, it may end up working.  However, when you use a rigid system of rules based on probabilities, and then make exceptions to those rules, you lower your probability of success.  Thus, if we view this as a tradable rally, then we are using the strength of leading stocks as a mechanism to increase market exposure.

In any event, it is possible that a proper Follow-Through Day will occur.  It is also possible that Distribution levels could make this environment difficult quickly.  Late stage Bull Market uptrends can be very difficult and expensive environments because they start and stop so abruptly.

  • 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.