Klein Market Summary-June 24th, 2013

Klein Market Summary

June 24th, 2013

Current Market Facts:

Technical Status	Correction Beginning Week 2
Other Observations	Fed meeting catalyzed the correctionLeading stocks are basing
Feel of the Market	Change of trend marked by large amounts of supply at current price levels

Important Levels on Key Indices:

Index	Support	Last Close	Resistance
Nasdaq	3306	3357	3391
Nasdaq 100	2800	2878	2933
S&P 500	1560	1592	1600
DJIA	14444	14799	15000

Market Interpretation:

The rally came to an end last week as the Fed policy change nears, even despite the Federal Reserve’s best attempts to soften the effects of the change.  The Distribution seen last Wednesday and Thursday reiterated that the powerful uptrend was caused primarily by the massive bond purchasing program that the Fed has been undertaking.  While many institutional and individual investors rode the market higher, they are clearly exiting the market in recent sessions.

One of the Fed’s stated objectives had been to use the wealth creating effect of the stock market to help stimulate the economy, and thus try to shore up weak fiscal policies.  Yet, as the stimulus is near its end, it seems that the economic backdrop does not justify record high stock markets.  While I would not expect the Fed to turn a blind eye to the stock market, it is not their mandate to prop up any markets, especially given the Fed’s historic tendency to overshoot with their policy decisions.

Joel’s Take:

The defense must take the field now, as the stock market is in retreat.  This powerful rally has come to an end, with the winding down of quantitative easing.  It is time to review past trades and await future opportunities.

Leading stocks should be watched for proper consolidations, as groups such as housing are under heavy pressure.

• 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-June 17th, 2013

Klein Market Summary

June 17th, 2013

 

Current Market Facts:

Technical Status	Confirmed Uptrend Beginning Week 8
Other Observations	Short-term correction continues with long-term uptrend still intact
Feel of the Market	Most leading stocks have traded light volume in recent weeks, as the rally has paused

Important Levels on Key Indices:

Index	Support	Last Close	Resistance
Nasdaq	3400	3423	3532
Nasdaq 100	2900	2943	3053
S&P 500	1600	1626	1687
DJIA	15000	15070	15542

Market Interpretation:

The short-term correction was met with a Follow-Through Day on Thursday, as most leaders continued to handle the action quietly.  In recent weeks, housing stocks and biotechs have been under pressure, as techs have generally consolidated constructively.

As the economy remains consistent, but lackluster, bond trades are becoming crowded, and foreign stocks are selling off, the stock market action seems to signal a continuation of the major uptrend, for now, though further evidence may tip the scales differently.

Joel’s Take:

In a typical Bull Market cycle, when the Fed begins to raise rates, the market may pause and then resume.  However, the rally usually persists until the third rate raise.  This cycle is certainly not typical, in that the Fed has maintained the lowest consistent interest rate in history, as the quantitative easing continues.  Once the current quantitative easing program ceases, then interest rate raises might begin.  Even so, it would seem that we are not near the end of the current rally, at least not due to rate increases.  It is also important to consider that the reason that rates go up, and that QE will eventually end, is that economic conditions are improving.

• 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-June 10th, 2013

Klein Market Summary

June 10th, 2013

Current Market Facts: 

Technical Status	Confirmed Uptrend Beginning Week 7
Other Observations	Friday’s quiet volume leaves the trend uncertain Leading stocks continue to act well
Feel of the Market	The short-term correction continues, while the major uptrend remains intact

Important Levels on Key Indices:

Index	Support	Last Close	Resistance
Nasdaq	3400	3469	3532
Nasdaq 100	2900	2991	3053
S&P 500	1600	1643	1687
DJIA	15000	15248	15542

Market Interpretation:

The uptrend continues, as last week’s unemployment number could allow the Fed’s stimulus program to continue.  While the Fed has said that their current easing campaign is tied to the unemployment rate, it is likely that they would tightened their policy sooner if economic growth improves.

While economic growth has been tepid, there are many stocks that have consistently high earnings growth.  Many of them are extended, but a few are not.

Joel’s Take:

As we begin to look towards the second half of the year, the current correction becomes more important.  If it were to extrapolate into an intermediate market correction, we might look for a fourth quarter rally.  However, leading stocks are generally only showing consolidation, and are not overrun with Distribution.  This suggests that the smart money is holding, by and large.  Still, it would be good to see some index accumulation to clarify the current action.

• 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-June 3rd, 2013

Klein Market Summary

June 3rd, 2013

Current Market Facts:

Technical Status	Confirmed Uptrend Beginning Week 6
Other Observations	The uptrend has seen elevated levels of Distribution Many leading stocks remain resilient, with only a few showing weakness
Feel of the Market	The uptrend continues, but more Distribution could lead to trouble

 

Important Levels on Key Indices:

Index	Support	Last Close	Resistance
Nasdaq	3400	3456	3500
Nasdaq 100	2965	2982	3000
S&P 500	1600	1631	1700
DJIA	15000	15116	15400

 

Market Interpretation:

The level of Distribution seen in the indices in recent weeks is more consistent with a short-term correction or pullback of 4% – 7%.  Historically, market trends are driven by investor decisions, especially those of institutional investors.  Most major rallies, historically, have had an initial pullback, which serves the purpose of scaring investors out of an otherwise obvious uptrend.

Uptrends in recent years have been driven largely by Fed liquidity programs, and certainly investor reactions to those programs.  As a result, we have not always seen typical market pullbacks.

Joel’s Take:

Friday’s action showed significant weakness, causing investors to ponder the “Sell in May” cliche.  Combined with weakness in prior sessions, it is clear that selling has increased.  Additionally, the S&P 500 and DJIA hit lower lows on Friday, suggesting that they may continue to trend lower.  Volume increased as shares plummeted into the close.

While the weakness seemed to hit processed food and consumer staple stocks especially hard, retailers, tech stocks, and other growth companies continue to look constructive.  Retail has not led meaningfully during the current market rally, but it is showing signs of strength now:  GPS, UA, VFC, KORS, DSW, LULU, TJX, PNRA, and CRI, among others.

• 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.