Please read carefully our disclaimers at the end of this newsletter. Weekly Status Report: Contents
Year-To-Date Performance
* An average of managed accounts, net after commissions and fees. Individual account results may vary. See also www.deencapital.com/perform.htm. For information on managed accounts, see www.deencapital.com/mgdaccts.htm. Market Stance: BULLISH (since August 18, 2004)It was another excellent week for the markets, and, even more so, for Deen Capital clients. The average Deen Capital managed account is now outperforming all three major market averages. It's been months since I've been able to say that. We're on a roll now, and, in my view, the stocks we now hold still have considerable upside potential, which means we could easily see even more stellar gains in the weeks ahead. We are still in the "sweet spot", with the kind of stocks I favor, small stocks with exceptional growth and valuation characteristics, performing far better than the market generally. Perhaps the single most important factor pushing stocks higher last week was a 14% decline in the price of crude oil futures, from over $49.44 a barrel to $42.54. That's a huge drop for one week, and a major plus for stocks. Technically, the market is in fine shape, with just one point of concern. My three primary market indicators* are unanimously and unambiguously bullish. Also, volume is swelling dramatically on the NASDAQ as it rises. That's a very good sign. NASDAQ volume topped 2.2 billion shares on Wednesday, and topped 2.4 billion shares on both Thursday and Friday. That volume was mostly on the buy side. These were the first 2.4-billion-plus days since June. And in June there was only one. When volume swells along with price, that suggests that the bull market is strong, and probably has further to go. (* My thee primary market indicators, all technical in nature, are my NASDAQ Timing Model (Ver.10q); my Performance-of-Recent-Stock-Picks Index; and the percentage of stocks ($8 and up) trading above their 50-day moving average.) The one point of worry is that the NASDAQ Composite has reached its January 2004 peak. On January 26, 2004, the NASDAQ closed at 2154. That, in retrospect, was a major top, and could easily represent a technical barrier. The NASDAQ touched and briefly surpassed that 2154 mark on Friday, before retreating slightly to close at 2148. Indeed, a single big down day from here could trigger a bearish signal from my NASDAQ Timing Model. If that were to happen, I would probably retreat immediately to cash (or mostly to cash). In other words, in my opinion, the NASDAQ is now at a crucial juncture. The other side of the coin is that a move up from here would be a breakout to a 3-year high, a technically bullish development. There's also, in the background, worries associated with the alarming decline of the dollar, worries I've articulated in this space over the past two weeks. Those worries are still very much there, but I am downplaying them this week because, in the end, it is the technical considerations that usually determine my course of action. Technical indicators, I believe, give me the best clues regarding when I should be in stocks versus when I should be in cash. In summary, my guess is that this bull market still has a ways to go. But that view is subject to change without notice, as I re-evaluate market conditions daily. Right now, in particular, the NASDAQ has reached an important crossroads. -KD, December 4, 2004
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Stocks Sold Over Past 13 Weeks
* Net buy (sell) prices shown are the total net purchase cost (proceeds) after commissions for all managed accounts divided by the total number of shares. The Gain(Loss) is therefore net after commissions. Welcome to The Deen's ListTM, an e-mail stock newsletter from Deen Capital Management, Inc. My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter. Your feedback is welcome. Send e-mail to deenslist@deencapital.com. To subscribe or unsubscribe, include the word "subscribe" or "unsubscribe" in the Subject line. This newsletter is free to managed account clients. For a limited time, it is also free to all interested parties. Your personal information, including your e-mail address, will be held in strict confidence by Deen Capital Management, Inc. We will not share it with or sell it to others. All stocks discussed in The Deen's ListTM involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's ListTM or purchased by Deen Capital Management, Inc. will be profitable. Past performance is not necessarily indicative of future results. The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness.
Ken Deen Copyright © 2004 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||