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Please read carefully our disclaimers at the end of this newsletter. Weekly Status Report: Contents
Performance
* An average of managed accounts, net after all commissions and fees. Click here for more performance data. Click here for information on managed accounts. Market Stance: BEARISH (since September 24, 2008) I was bullish last Friday, Monday, Tuesday, and part of Wednesday. This was a mistake, especially since my indicators were overall bearish throughout, and my NASDAQ Timing Model did not give a signal. We lost money, and under-performed the S&P 500 slightly (-3.9% vs -3.3% last week). I rarely override my indicators, because, when I do, I too often end up regretting it. Such was the case here. But bear markets almost always end, and bull markets begin, with a bang -- a day or two of huge buying volume. And we had two days of record-setting buying volume on September 18 and 19. The notion that that rally marks an important market turning point is not dead. It's still possible. The low for the year was September 17, and, if Congress enacts this $700 billion bailout, we could see a big boost to investor confidence -- and stocks. Indeed, the market is now at the mercy of this bailout plan. The market goes up and down in lock step with the perceived odds of historic rescue being enacted by Congress. I am well aware of the gravity of the situation. Banks are failing like dominoes as wealthy depositors take their money out. There are no more independent investment houses on Wall Street -- they've all gone under or merged with banks. Credit markets, which provide the essential grease that allows the U.S. economy to function on a day-to-day basis, are seized up. If Congress fails to act, the economy could become much worse, resulting in massive unemployment. Even if Congress does act, it may not be enough. I may move even more heavily to cash if Congress disappoints the market. On the other hand, if the government rescue is enacted, and does what it's supposed to do, the stock market will be the first thing to recover. There is an enormous amount of cash sitting on the sidelines right now. We are now 6% in Royal Gold, 44% in the S&P 500, and 50% in cash. A very low-risk position. I intend to stay that way until my indicators tell me it's time to get back in. I may, for example, turn bullish if I get a signal from my proprietary NASDAQ Timing Model. Of my three indicators, this is the one which gives the earliest warning of major market turns. When it gives a signal, I usually go with it, even if my other two indicators dissent. It is important to act as quickly as possible at major market turning points. (Of course, this Model is not infallible -- it also sometimes gives bad signals.) By the way, in terms of my #1 goal -- outperforming the S&P -- I've just recently been falling slightly behind on a year-to-date basis (now -17.7% vs -16.1%), though we are still outperforming on a 12-month basis (-14.5% vs -18.9%, Sep 26 2007 to Sep 26 2008) and by 17 points on a 24-month basis (+11.4% vs -5.7%). I no longer have much hope that 2008 will be profitable, but I do very much expect to end the year in a better place than where we are now. I urge you to hang in there. My Three Primary Technical Indicators:
Prior week Now
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NASDAQ Timing Model (Ver.10q): BEARISH BEARISH (1)
Last signal: BEARISH on Sep 4, 2008
Performance of Recent Stock Picks: -1.2 BEARISH -4.7 BEARISH (2)
Market Internals: 42% NEUTRAL 27% BEARISH (3)
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Market's Overall Technical Rating: BEARISH BEARISH
Stocks:Cash ratio (average): 100:0 50:50
(1) A proprietary computer model based on technical analysis of the NASDAQ Composite. (2) This number (from -10 to +10) is based on the performance of ALL my recent stock picks (I actually buy only some of these). A positive number means my recent 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, Sunday, September 28, 2008 Model Portfolio
* Buy prices shown are net after commissions and fees. Stocks Sold Over Past 13 Weeks
* Buy and sell prices shown are net after commissions and fees. This means that the gains/losses shown are also net after transaction expenses. 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.
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