Klein Market Summary-March 25th, 2013

Klein Market Summary

March 25th, 2013

 

Current Market Facts:

Technical Status

 Confirmed Rally Beginning Week 13
   

Other Observations

Cyprus is the biggest concern for the markets?!

Indices barely budged last week, despite attempts to sell off

   

Feel of the Market

Leadership appears to be rotating as indices remain robust
   

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3213

3245

3300

Nasdaq 100

2783

2800

2812/2878

S&P 500

1538

1556

1575

 DJIA

14382

14512

15000

 

Market Interpretation:

It was somewhat confusing to observe the global market reaction to a panic move by the Finance Ministry of Cyprus to seize bank assets owned by private citizens and companies.  Without diminishing the plight of those involved, the size of Cyprus as a global power is miniscule.  Its GDP is only about 0.2% of the European Union, and a default there just won’t effect the rest of Europe, or Global Economics.

The Cyprus news was important, as a technical test of the market’s resilience.  The U.S. stock markets, at all time highs, are somewhat vulnerable for a short-term correction, as we had about a month ago.  However, by the end of the week,  the pullback had a negligible effect, with the indices closing flat.

Joel’s Take:

I don’t often evaluate leading stocks in the KMS, except as a commentary on market strength.  It has been fascinating to watch the contrast of AAPL’s topping action with an otherwise powerful uptrend.  The effect has been that the QQQ is up only a few percent since the first trading day of the year, while other indices are far outperforming.

To comment on other leading stocks, mortgage stocks OCN and NSM appear to be correcting.  Housing stocks continue their uptrends, even though some have become somewhat obvious.  Housing suppliers appear to be the most robust here as stocks such as LL and LPX seem poised to trend higher.  Medical groups are acting well, led by hospitals, insurers and biotech.  Tech and some consumer names are also acting well.  Retail seems to be lagging with the recent action of ULTA, LULU, and KORS.

I have a personal bias towards very liquid stocks because I am convinced that they provide the best opportunity in the market.  Seeking the best liquid leading stocks, I have found HD, LNKD, CELG, NFLX, CREE, GOOG, LEN, MA, V, PAA, PHM, BA, TDG, YHOO, BIIB, DFS, NDAQ, and GMCR.  While I often hear investors ask about stocks like RKUS or DDD, I avoid thinner ones because they often have the type of volatility that can be seen in these two.

  • 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.

2 responses to “Klein Market Summary-March 25th, 2013”

  1. Deepali says :

    Hi Joel,
    I really enjoy your weekly update and it is helping me to improve my trading.
    I have one question on liquidity. What is your minimum criteria?Is there any different criteria for IPO and for true market leaders…
    Thanks,
    Deepali

    • Joel says :

      I generally look for 80-100 million average daily dollar volume. For example, a stock trading at 100 per share with average volume of 1,000,000 (100 x 1,000,000) will have 100M $V. If I own 8 stocks, I want 6 or 7 to have this liquidity. I generally won’t go below $ 50M $V except with IPO’s. If they are that thin and that great, I wonder why all the institutions are passing it up.

      IPO’s are different. Many great IPO’s begin with light $V. For example, FSLR’s initial breakout was very illiquid at 14M $V. However, it rapidly liquified as institutions piled on. Its liquidity at the top was about 1.4 Billion $V.

      These are my personal investment guidelines, because I always want to have an exit strategy. Thanks for the great question.

      Joel

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