Klein Market Summary-February 25th, 2013

Klein Market Summary

February 25th, 2013

 

Current Market Facts:

Technical Status

 Confirmed Rally Beginning Week 9

Other Observations

High volume market Distribution has weakened some leaders

Leadership continues to thin out

Feel of the Market

Waiting for more evidence: Is this an initial pullback or a top?

 

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3100

3162

3200

Nasdaq 100

2756

2738

2800

S&P 500

1500

1516

1575

 DJIA

13661

14000

14198

 

Market Interpretation:

The market action on Wednesday and Thursday brought the markets back to the levels that they were at in mid-January.  This heavy Distribution weighed on the leadership as more leading stocks showed evidence of basing.  As the sequestration draws near, the market is poised to go in either direction.

It would not be unusual for an intermediate correction to begin now, based on historic precedent.  However, there is also a strong case for a continued uptrend, especially where new leading stocks have emerged to replace the fallen leaders of the last few years.

Joel’s Take:

Investing in recent years has been exceedingly difficult because market trends have begun and ended abruptly, largely as the result of being driven by Fed policy.  This has caused unusual behavior in leading stocks, in some cases, as well.  The current trend is no different.  However, it makes the current action less clear.  Historic market rallies tend to have minor pullbacks, or short-term corrections.  Last week’s Distributions could be part of that action.  Yet, if we are still stuck in rallies, like those that are being lifted primarily by Fed liquidity, and not pure institutional demand, then we might anticipate that any more Distribution would end this uptrend.

Watching KORS, it has been interesting to see a stock with amazing fundamentals be continually weakened by insider activity.  KORS has the best earnings growth metrics in retail right now, but it has been unable to achieve a sustained uptrend, as it announced its third follow-on offering last week.

  • 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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