Archive | April 2013

Klein Market Summary – April 29th, 2013

Klein Market Summary

April 29th, 2013

 

Current Market Facts:

Technical Status

 Correction Beginning Week 3
   

Other Observations

Some leading stocks continue to hold up

Indices are back up near highs

   

Feel of the Market

Earnings reports and Fed policy are in focus
   

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3200

3279

3300

Nasdaq 100

2800

2841

2860

S&P 500

1575

1582

1597

 DJIA

14500

14713

14887

Market Interpretation:

The general market indices have bounced back up near highs.  The trend could go in either direction, at this point.  Two weeks ago, the indices experienced a level of Distribution that would lead to a market top, in a typical market cycle.  However, last week the indices rose for 5 consecutive days, including support at the 50 Day MA’s for the S&P500 and the NASDAQ Composite.

If there is to be a resumed uptrend, at this point, we would expect to see more market accumulation.  April 23rd was interesting as such, because it had the potential to be a Follow-Through Day.  Yet, it lacked in magnitude and volume was fairly quiet.  The end of last week had signs of stalling.  Still, this close to highs, earnings or Fed decisions can steer the market in either direction.

Joel’s Take:

Regardless of the eventual market direction at this point, market analysis suggests a defensive stance.  If the trend resumes higher, there will be plenty of time to increase exposure.  However, the end of April, the Fed meeting, and earnings are certain to shape market action in coming sessions.

  • 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-April 22nd, 2013

Klein Market Summary

April 22nd, 2013

 

Current Market Facts:

Technical Status

 Correction Beginning Week 2
   

Other Observations

Institutional selling topped the market last week

Biotechs and some other leading stocks remain resilient

   

Feel of the Market

Most leading stocks are now correcting
   

 Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3200

3219

3300

Nasdaq 100

2731

2742

2800

S&P 500

1545

1555

1575

 DJIA

14366

14547

15000

Market Interpretation:

Despite the prior week’s apparent support, the major indices hit resistance as the S&P 500 challenged its all time high.  The NASDAQ indices lagged in the recent rally and remain far from their 2000 highs.

With the market in correction, it is again a time for patience.  The recent rally was quite interesting because in most environments, weak economic fundamentals and a soft outlook would probably have not led to such a powerful rally.  Yet, most other asset classes remain less desirable than stocks.

Joel’s Take:

Biotechs and a few isolated leaders continue to be worth watching.  Yet, with the market trending lower, most stocks will follow.  Reducing exposure is the best way to preserve funds in difficult markets.

When the market signal changes rapidly, from rally to correction, then back, it becomes very difficult to profit because leading stocks usually take weeks to rise substantially.  Even if the market trend turned back up, it might be very difficult to profit from leading 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-April 15th, 2013

Klein Market Summary

April 15th, 2013

 Current Market Facts:

Technical Status

 Rally Beginning Week 16
   

Other Observations

Powerful accumulation has powered markets to highs

Many leading stocks rebounded with the market

   

Feel of the Market

The market continues to surge, shaking off every concern
   

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3215

3295

3300

Nasdaq 100

2812

2856

2878

S&P 500

1575

1588

1600

 DJIA

14684

14865

15000

Market Interpretation:

Last week’s action was a display of clear support and accumulation as the indices surged to highs on big volume.  It is interesting to consider that the DJIA and the S&P 500 are at all time highs even as economic fundamentals might seem to be consistent with lower levels.  The NASDAQ indices have lagged this year because of the enormous weighting of AAPL and its 20% loss for the year.  Other than AAPL, tech stocks have not lagged, but they have not been quite as strong or resilient as other groups.

While the rally seems to be extended, the recent strength in biotechs could help to fuel further upside.  Only a week ago, the indices seemed ready to correct, but buyers rushed in, even despite a disappointing employment report.

Joel’s Take:

Liquid leading stocks.  Many stocks seem ready to continue their uptrends, and others already have.  The best liquid leading stocks range from HD and V to biotechs, GILD, BIIB, REGN, and CELG, to other innovative leaders such as LNKD, CREE, GMCR, and FLT.  While the market has been wild, it is clearly under accumulation again.

Whether the market is under accumulation from institutional money managers or from central banks, like the Fed and the ECB cannot be known directly at this time.  Ultimately, it doesn’t matter.  This powerful uptrend continues to offer up abundant opportunities.

  • 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-April 8th, 2013

Klein Market Summary

April 8th, 2013

Current Market Facts:

Technical Status

 Rally Beginning Week 15/Possible Correction Week 2
   

Other Observations

Several leading stocks have corrected

Indices are under pressure

 

Feel of the Market

Weak market action has put the rally in question
 

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3200

3203

3270

Nasdaq 100

2744

2772

2829

S&P 500

1532

1553

1575

 DJIA

14383

14565

14684 

Market Interpretation:

In the first week of the second quarter, the indices have pulled back, pulling much of the leadership with it.  The Distributions seen last week clearly represented major institutional selling.  While Friday’s gap down on a mediocre job report could have been disastrous, the indices rallied throughout the day to close down only slightly.  Without that supporting action, the market would have been in a correction.  However, as it is, the indices are still barely in rally mode.

Last week’s action pressured much of the leadership in construction, tech, oil refiners, and financials.  Core leadership remains in consumer electronics retailers, and biotech.

Joel’s Take:

Last week’s action tested many leading stocks for signs of support and accumulation.  Many liquid stocks have closed below the 10 week MA for the first time since their breakouts.  While it is not clear whether the markets will move lower, it seems that they are pausing for the time being.  With the S&P 500 just below its all time high, it makes sense that indices would retrace part of their uptrend here.

Many leading stocks were hit last week amidst the difficult market action.   NFLX, which I discussed last week, was one of those casualties.  Still enough remain to make this market uncertain.  If indices continue to find support at Friday’s level, then the rally is likely to continue.  2300 represents an important level on the NASDAQ Composite, while the 50 Day MA on the S&P 500 at 1532 is also quite important.  If the respective indices remain below these levels for more than a few sessions, then a significant correction is likely to take hold.

  • 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 – April 1st, 2013

Klein Market Summary

April 1st, 2013

 

Current Market Facts:

Technical Status

 Confirmed Rally Beginning Week 14
   

Other Observations

Markets ended the quarter under accumulation

Several fresh breakouts have fueled additional market upside

   

Feel of the Market

Broad accumulation continues to dominate market action
   

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3213

3267

3300

Nasdaq 100

2812

2819

2878

S&P 500

1538

1569

1575

 DJIA

14383

14579

15000

Market Interpretation:

The first quarter was marked by several themes: topping action in bonds  as seen in TLT, a continued breakdown in AAPL, a powerful rally with broad stock market leadership, and political status quo in the U.S.  GDP has continued to grow slowly.  The rally continues for now, as the S&P 500 pushes all-time highs.   Looking ahead, there are many stocks that have just broken out or are about to.  Some former leaders have risen to the front of the leadership: GMCR and NFLX.

Joel’s Take:

I would like to underscore my approach the market, and some of my reasons for it.  First, I want to invest the way that I will eventually need to.  For example, I can’t trade thin stocks because if I am successful, I won’t be able to repeat.  Thus, my approximate liquidity threshold is $100 Million Average Daily Dollar Volume (100 M $V).  Second, I rely heavily on repeating historic chart patterns, and ones that I have proven that I am able to trade successfully.  Finally, I am as strict as I can possibly be in controlling risk, especially in adverse market environments.

I want to comment on a stock that has caught my attention because it is one that I have been successful with in the past.  My observations on the stock are not to be construed as advice, but as data interpretation.  The stock is NFLX.  Though the earnings have not reaccellerated, its technical action is unsurpassed.  NFLX is one of those stocks that people seem to either love or hate.  It has a ridiculous valuation that is pricing in enormous earnings acceleration.

At first glance, NFLX seems overpriced, because it had an enormous uptrend, and has not retraced a significant amount.  From January 20th, it rose 90% in 18 days, and since, has only corrected 11%.  Unusually powerful stock action.  Not only has the stock levitated, and held its gains, but the price volume action shows a clear lack of net selling or Distribution.

NFLX is somewhat unusual for a large cap, because it only has 53 Million shares in its very tight float.  Also, according to the most recent filings, 33.4 million shares are owned by institutions.  This does not include institutions that don’t report their positions and individuals.  As of March 15th, the stock had a total of 8.6 million shares sold short.  My point in laying out this data is that NFLX seems to be cornered.

With a huge uptrend, no real pullback, and NFLX remaining under professional institutional Accumulation, in a robust stock market rally, the only Bearish argument is that the stock is trading at a high valuation.  That opinion is like saying that quarterback Joe Flacco’s $121 million dollar contract is too high.  Because both stock prices and athletic salaries are auction markets where supply and demand set the price levels, these valuation arguments ignore supply and demand.  Great opportunities cost more than others.  The Bullish arguments for NFLX seem to be escalating subscriber growth, a takeover target, developing original content, earnings recovery, and the Disney contract.

We recognize the pattern as a High Tight Flag.  It is the pattern that represents ultimate strength in the market.  When a stock moves like this, it is often because the fundamental facts of the stock have changed.  Stock market history is replete with stocks that skyrocketed after their fundamental facts radically changed: BS in 1915, SYN 1963, ROL 1963, QCOM 1999, TASR 2003, MA 2006, AAPL 2004, etc.

Assuming that the NFLX pattern is correct and it stages a proper breakout, a stock like NFLX historically only occurs about every 2 years.  The data suggest that NFLX can go much higher near-term.  This commentary is not meant to be advice of any sort.

  • 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.