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 July 28, 2006)I have lots of good news to report this week, both for Deen Capital clients and for the stock market as a whole, and also a cautionary note. First, the good news: + Client accounts handily outpaced the market averages. Deen Capital accounts were up about 2.5%, versus less than 1% for the market averages. + We learned last week that home prices fell in September 9.7% versus a year ago. This was the biggest drop in 35 years. I see this as a positive for stocks. As real estate is giving increasingly poor returns as an investment, stocks are giving increasingly good returns. The pendulum continues to swing away from real estate and towards stocks as the investment of choice. (That pendulum reached an historic extreme in the other direction earlier this decade, when real estate was giving fabulous returns and stocks were giving dismal returns. I think this pendulum still has a long ways to go in this new direction. I do not mean to say that real estate will crash; only that its glory days are over.) + With third quarter earnings results for most of the S&P 500 now in, profit growth is on track to grow 17% versus a year ago, the strongest gain since 2004. + My three technical indicators, though no longer unanimously bullish, are still solidly in the bullish camp, two bullish and one neutral. There is just one worry I have, and it is a big one. - The NASDAQ Composite is vulnerable from a technical point-of-view. After going almost straight up since July, it is overdue for a significant correction. It is particularly vulnerable at its current level, because it is now butting up against a major peak at 2371 set on April 19. On Thursday, this index closed at a new multi-year high, briefly surpassing that April peak by a few points. Then, Friday, yesterday, stocks fell. This smells a lot like a very bearish double-top. But wait, one key ingredient is missing -- volume. Friday's selloff was accompanied by a downtick in volume -- less volume than Thursday. That is significant. Major turns in the market's direction are almost always announced by a strong heavy-volume day in the new direction. Indeed, if Friday's volume had been heavier than Thursday's, my NASDAQ Timing Model would have given a bearish signal, and I would be turning bearish right now. But, as it is, I'm hanging in there, albeit nervously, in the bullish camp. I'll be watching the market, especially the NASDAQ, closely next week, because, as I say, it is at a particularly vulnerable point here. My Three Primary Technical Indicators:
Prior week Now
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NASDAQ Timing Model (Ver.10q): BULLISH BULLISH (1)
Last signal: BULLISH on Jul 28, 2006
Performance of Recent Stock Picks: +6.7 BULLISH +5.0 NEUTRAL (2)
Market Internals: 79% BULLISH 77% BULLISH (3)
Overall Rating: BULLISH BULLISH
Stocks:Cash ratio (Ken's IRA): 73:27 86:14
(1) A proprietary computer model based on technical analysis of the NASDAQ Composite. Last signal: BULLISH on Jul 28, 2006. (2) This number (from -10 to +10) is based on the performance of ALL my stock picks (I actually buy only some of these). A positive number means my stock picks are generally rising; a negative number means they are generally falling. Even so, I consider a reading below +3.1 to be bearish. I require a reading of +5.6 or better to call this indicator bullish. (3) This is the percentage of stocks ($8 and up) which are trading above their 50-day moving average. The rating of this percentage (bullish, bearish or neutral) is based on which way it's been moving recently -- up, down or sideways. -KD, October 27, 2006
* 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. The Deen's List Copyright © 2006 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||