Klein Market Summary-July 29th, 2013

Klein Market Summary

July 29th, 2013

Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 4

Other Observations

Distribution is slightly elevated on NASDAQ

Indices remain near highs

Breakouts increase in number

Feel of the Market

Earnings is in focus

Important Levels on Key Indices:

Index

Support

Last Close

Resistance

Nasdaq

3575

3613

3625

Nasdaq 100

3053

3076

3100

S&P 500

1654

1692

1700

 DJIA

15340

15558

15600

 

Market Interpretation:

The uptrend has paused on the NASDAQ.  At this point, I would continue to interpret the action as very favorable as new liquid breakouts add to the breadth of leadership, such as FB and LNKD.  Technology remains in focus, with medical and consumer groups also contributing to the leadership.

Fed policy has been a dominant economic theme.  While quantitative easing is controversial for many reasons, it has been my understanding that the Fed has no effective tools to deal with deflation.  However, they can manage inflation in a variety of ways.  So, rather than have housing deflation contaminate the entire economy, and likely the global economy, they are engineering a level of inflation back into the system.  Other central banks have imitated the move, which suggests that they endorse the logic behind it.

The stock market seems to remain primed, long term, for inflows domestically and internationally.  This may be the beginning of a prolonged period of PE expansion in the market that we have not seen since the 1990’s.

Joel’s Take:

The market seems to be forming a short-term digestion here.  In the meantime, many leading stocks are thriving, suggesting a market breakout to the upside could be the most probable outcome.  It should be said that the digestion could develop into a longer correction, but that doesn’t seem likely given the strength of the leadership.

The Consumer and Technology:

Most of the U.S. economy is consumer-based – about 65%.  In our stock market endeavors, our biggest opportunities usually lie in disruptive, innovative stocks that have a new competitive edge.  The current environment is ripe with opportunities that fit these descriptions.  Many of them are technology stocks, which makes sense, because the nature of what we call technology is that it is always new.  Current leaders in these groups are FB, LNKD, PCLN, TRIP, NFLX, TSLA, SPWR, QIHU, YY, GMCR, YHOO, and CREE.  Many others are poised to break out, but these are probably the leading ones.

It should be said that the biotech and pharma stocks that are leading are also technology based.  They have been flourishing this year, and are continuing their moves, for the most part.

  • 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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