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.
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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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