Klein Market Summary-July 22nd, 2013

Klein Market Summary

July 22nd, 2013

Current Market Facts:

Technical Status

Confirmed Rally – Beginning Week 3

Other Observations

S&P 500 and DJIA have joined NASDAQ in new high ground

Leadership continues to expand

Feel of the Market

New breakouts are able to extend their gains in this environment
 

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3575

3588

3600

Nasdaq 100

3053

3045

3100

S&P 500

1654

1962

1700

 DJIA

15340

15544

16000

 

Market Interpretation:

The uptrend continues with options expiring on Friday.  Friday saw the NASDAQ Distribute as GOOG and MSFT fell off of earnings.  Still, GOOG found support and closed near the high of its range.  With the market back in an uptrend, the focus is on Distribution levels, and the health of leadership.

As the rally continues to unfold, earnings have taken center stage.  In the next few weeks preparation will be a key to catching powerful moves at the right time.  While many leading stocks have broken out, others are poised to do so.

 

Joel’s Take:

Earnings reports are important catalysts for breakouts.  This week may provide several such opportunities.  On the other hand, earnings reports also pose a risk, which can necessitate limiting exposure until the report is released.  The amount of exposure that is prudent to have prior to earnings is contingent upon your position in the stock, the quality of the stock, and your portfolio’s performance.

As we saw in the first quarter this year, when a stock gaps up to new highs on big volume, and a positive earnings report, it is almost always a buy signal, no matter how high it gaps.  These are difficult opportunities to interpret, when emotions get in the way.  Just recently, the gap up in CELG offered an opportunity to get into one of the best leaders of the year.  Buying at highs is counterintuitive, and it does not always work, yet big volume is a n important clue in evaluating trends.

Leading Groups:

In first quarter of this year, housing, construction supply and mortgage financing stocks flew high.  For the time being, they seem to be sitting out of the current rally.  Also, biotech asserted itself a leading group with REGN, CELG, BIIB, and GILD, among others.  The group continues to lead with SNTS, REGN, CELG, and several other potential liquid names.

Tech stocks, and in particular consumer technology seems to be the leading theme in the current market.  These leaders have shown powerful accumulation so far, with many that are poised to breakout: PCLN, NFLX, TSLA, CREE, and YHOO.

Auto makers, green energy, and restaurants are also working themes, at present.  Investing in groups such as the ones mentioned greatly improves probabilities of success.

  • 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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