Klein Market Summary-August 26th, 2013

Klein Market Summary

August 26th, 2013

Current Market Facts:

Technical Status

 Confirmed Rally – Beginning Week 8

Other Observations

Market has stabilized at support levels

Leading stocks are acting very well

The rally seems likely to continue

Feel of the Market

The short-term correction has seen leading stocks move higher, in many cases

Important Levels on Key Indices:



Last Close






Nasdaq 100




S&P 500








Market Interpretation:

Last week, the market seemed like it was on the verge of a correction.  Certainly, there was a pullback underway, especially in the DJIA.  However, the leading NASDAQ indices have been outperforming since the beginning of the third quarter.  While AAPL’s heavy weighting on the NASDAQ indices has helped to limit their downside, it also serves as evidence of institutional accumulation amid this pullback.

Currently, there is a moderate level of Distribution on the markets, but the S&P 500 and NASDAQ Composite have not corrected a significant amount.  In a normal rally, short-term corrections tend to correct 4-7% and last 3-4 weeks.  The June correction was more consistent with the historic norm than the last two weeks.  Current action might be best described as consolidation.  It is possible that the indices could stall and form another leg lower, but that seems less likely at this point with surging leadership.

Global stock and bond markets may be at a cusp where money flows could change based on changing Fed policy.  This could greatly benefit the stock market.  If bond market outflows continue, stocks are the most likely beneficiary.

Joel’s Take:

Perspective is so important in the market.  Investors have just survived a very difficult 13 years in the stock market.  Normally, when we have seen stocks that are up 50% or more during that period, we feel that those are really exceptional leaders.  However, historically, every rally has produced multitudes of stocks that have risen several hundred percent and more.

Yet, any time the market enters a solid rally, or stocks begin to get slightly extended, it feels like they are overdone by comparison to the past decade.  Sound trading rules will keep you in leading stocks for the duration of major moves.  Personally, I try not to trade unless a rule compels me to.  I have found that doing otherwise introduces lower success rates into my trading, and ultimately costs me money.

  • 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.

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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