Archive | January 2013

Klein Market Summary-January 28th, 2013

Klein Market Summary

January 28th, 2013

Current Market Facts:

Technical Status  Confirmed Rally Beginning Week 5

Other Observations

Market indices have continued to show resilience, even as heavy weight AAPL continues to plummetLeadership has continued to improve

Feel of the Market

The indices are extended, but may continue to trend higher

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3061

3150

3200

Nasdaq 100

2713

2737

2750

S&P 500

1474

1503

1575

 DJIA

13661

13895

14000

Market Interpretation:

The action of AAPL on Thursday showed an uncommon amount of market strength.  It also underscored the end of AAPL’s leadership. AAPL was crushed on Thursday because of its weak earnings report and outlook.  Its leadership is really over because its blistering earnings growth is over and there are no visible catalysts for it to reaccelerate.  It now rests 37% off of last September’s all time highs.  AAPL’s immense weighting left the indices and leading stocks vulnerable to a sell-off, a contagion sparked by the many stocks that are in groups, ETF’s, or supply chains with AAPL.  Remarkably, that did not happen.  Leading stocks rose across the board.  This suggests that money was flowing out of AAPL and into other, new leaders.  It is remarkable that there was not a contagion, but a rotation into new leaders, because most recent rallies had the same old liquid leaders: AAPL, BIDU, and PCLN.  This is an rare sign of strength.

Other important market evidence occurred Thursday and Friday, as NFLX surged 70% in the shortened week.  NFLX reported much better than expected, and it was heavily shorted.  This stock is far from a buy point, and should be watched, but not bought here.  What is important is that a move like this usually only occurs in a very strong market.  Other breakouts have been robust, and the general tenor of the market is strong.

Joel’s Take:

Leading stocks will continue to report earnings in coming weeks, as the indices trend to new highs.  This may provide additional opportunity, but the markets and many leaders are now extended.  It means that new purchases must be spread out over time to avoid getting trapped by a market pullback.

Though the current rally is strong, recent rallies have ended abruptly.  Vigilance is critical.  A strong uptrend often covers investing mistakes, but that is not an excuse to be sloppy.

  • 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 – January 22nd, 2013

Klein Market Summary

January 22nd, 2013

Current Market Facts:

Technical Status  Confirmed Rally Beginning Week 4

Other Observations

The indices have continued higher, powering through options expirationLiquid leaders are continuing to hold up

Feel of the Market

Action remains robust as earnings unfold

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3061

3135

3200

Nasdaq 100

2713

2743

2750

S&P 500

1474

1486

1500

 DJIA

13500

13650

13661

Market Interpretation:

Last week’s action continued to show overwhelming signs of institutional accumulation.  Money continues to flow into medical, financial, tech, and consumer groups.  Housing remains robust.  With leading stocks acting well and the indices trending higher, earnings will take center stage this week.  Earnings reports are not necessarily about reporting a greater number than expected.  There may be many acute reasons that stocks failed to impress in the fourth quarter, including the hurricane, weather, fiscal cliff, and election uncertainty.  Yet, stocks that issue forward guidance that exceeds expectations may have positive reactions in a market environment that is forward looking.

Joel’s Take:

Earnings reports are the immediate focus.  Stocks that have accelerating current earnings have historically been the biggest winners.  Leadership can change quickly during earnings, so it is important to be prepared and to act quickly, as the facts change.

With the market trend remaining strong, it remains a time to maintain exposure to stocks.  The market is not significantly extended, but it would not be unusual for it to pull back in coming weeks.  Balancing exposure to the market by adding gradually over time, at proper buy points is a good way to prepare for an eventual short-term correction or pullback.  It makes it likely that you won’t have much stock that is underwater.

  • 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-January 14th, 2013

Klein Market Summary

January 14th, 2013

 Current Market Facts: 

Technical Status  Confirmed Rally Beginning Week 3 

Other Observations

Markets remain under accumulationLeading stocks have continued to surge higher

Feel of the Market

The rally is showing a lot of power led by some first stage leaders

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3061

3126

3200

Nasdaq 100

2713

2748

2785

S&P 500

1448

1472

1474

 DJIA

13365

13488

13650

Market Interpretation:

The indices have trended higher with tight daily closes.  It has been rising on big volume.  Institutions are aggressively accumulating financial, tech, medical and consumer stocks.  The markets are trending to new highs – the NASDAQ Composite is near its best levels since the bubble burst in 2001, and the S&P 500 is approaching its 2007 Bull Market high at 1575.

Global stock markets are rallying.  Some markets have been rising for months; others began recently.  This global trend of money flowing into stocks is positive for the U.S. stock markets.  The global breadth suggests that the market may be more likely to trend for a longer period.

Joel’s Take:

In recent weeks, I was inclined to think that the market would rally after the Bush tax cuts were renewed – regardless of the exact policy decision.  Any outcome was better than the uncertainty.  I had thought that the market would have a quick, short rally, and then roll over.  Without the strength of the 2009 leadership to power it, I imagined that it would have a hard time trending higher for any period of time.

Yet, as I view the action real-time, it seems that there is a much stronger case for a durable rally than I had thought, here.  If new leading first-stage stocks replace old ones that have topped, there may still be sufficient leadership.  A few powerful stocks have surged in the last week.  True leaders always give many chances to get in.  Patience and discipline.

Having core positions in leading stocks is a key to making big money in the stock market.  However, selling true leaders for a 5% or 10% gain will probably not lead to big overall returns. I remember in the mid 1990’s, and again in 2006, people were talking about settling for smaller gains than 20%.  That was just about the time that the big opportunities returned in stocks.

  • 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-January 7th, 2013

Klein Market Summary

January 7th, 2013

Current Market Facts:

 

Technical Status  Confirmed Rally Beginning Week 2
   

Other Observations

Powerful beginning to 2013 confirms a new rally

Broad accumulation has driven the market to highs

   

Feel of the Market

Stocks are in demand
   

 

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3061

3102

3200

Nasdaq 100

2713

2724

2785

S&P 500

1448

1466

1474

 DJIA

13365

13435

13650

 

Market Interpretation:

The market has surged higher, led by broad action in large financials, medicals, consumer names, and basic goods and services stocks.  While the Follow-Through Day occurred later than usual, it does qualify as a rally confirmation.  With tax increases finally agreed upon, and the sequestration postponed, there may be some room to rally here before negotiations between the political parties take center stage again.

On Friday, the S&P 500 had its highest close since 2007.  It has yet to take out 2012’s intraday high of 1474.  AAPL has been the most important market index component in the past decade, with an S&P 500 weighting of 4% and a NASDAQ 100 (QQQ) weighting of 20%.  With AAPL’s earnings decelerating, and its chart clearly demonstrating net institutional selling over the past quarter, it may continue to weigh on indices, even as current leading stocks trend higher.

Joel’s Take:

With a rally under way, it is important to balance the urgency to get invested at proper buy points with the awareness that many stocks are emerging from late stage bases.  Earnings are right around the corner – another challenge to getting invested at this point.  However, during an earnings season, such as this one, where a stock’s earnings may have been impacted by acute events such as Hurricane Sandy or the fiscal cliff, forward looking commentary might be much more important than actual earnings for the quarter.  A weak quarter may not be an indicator of a stock’s performance, but rather a short-term condition.

Rules-based discipline is the best way to profit in a market like this one.  Buy at proper buy points.  Keep losses small.  Let winners run.

  • 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.