Klein Market Summary-February 19th, 2013

Klein Market Summary

February 19th, 2013

Current Market Facts:

Technical Status  Confirmed Rally Beginning Week 8 

Other Observations

Indices have tightened up in recent sessionsSome leading stocks have tumbled in the last week

Feel of the Market

Some thinner leading stocks have fallen 

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3100

3192

3200

Nasdaq 100

2770

2765

2800

S&P 500

1500

1520

1575

 DJIA

13661

13982

14000/14198

Market Interpretation:

Markets have seen constant accumulation at and near highs.  The rally is reminiscent of the rally that occurred in the first quarter of 2012.  That rally was similar because the indices did not have an initial pullback, which is extremely unusual historically.  This aberration was probably caused by a Fed liquidity program that was creating an enormous amount of liquidity.  I do not mean to imply that the rally is not real in any way, just that the current rally has not paused or pulled back meaningfully, yet.

Last week, some of the marginal leading stocks like RAX, URBN, BBRY, DDD, and SSYS, fell hard.  This is not necessarily a sign of weakness because these stocks did not have leading technicals or fundamentals, or in the case of DDD and SSYS, were of lower liquidity and had already flashed several sell signals.  Liquid leading stocks generally have continued to thrive, with most sectors participating in the rally.

Joel’s Take:

While the 2012 rally did not have an initial pullback, most rallies do.  When an eventual correction, short-term or long, does occur, it is important to limit exposure in order to protect stocks that have hold rules in effect.  While it would be ideal to have your best positions match up with the best leading stocks in the market, it does not always work out that way unfortunately.  Only a very few stocks should be held through bases.  Those are usually the stocks that you have bought and held properly, kept a low basis in, and are up 30-50% from your buy points.

Garden variety stocks rise 20-25% between bases.  True leaders tend to go much further.

  • 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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