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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 December 13, 2008) Last week was disappointing for Deen Capital clients, as managed accounts slipped 0.3%, while the S&P gained 0.9%. For the quarter and year so far, however, we are still handily outperforming (though still down). For the quarter to date, it's Deen Capital -8.2%, S&P -23.4%. Year-to-date, we're -26.7%, versus -38.2% for the S&P. Last year, I'd like to remind you, it was Deen Capital +27.6%, S&P +5.4%. I am very much achieving my goal: outperform on the way up, and also outperform on the way down. Very few investment vehicles can do this with any consistency. The market's tone improved again last week, for the fourth week in a row. We are 39% in cash now, 61% in stocks. That's a high level of exposure to stocks given that I'm still bearish. But my finger is, more than usual, on the sell trigger. The market could easily retreat back to its November lows. That's 15% below where we are now on the S&P. I do not want to participate in such a drop! Here are some of the factors I am looking at. First, the bullish case: * Since late November, the market has been trending higher. * One of my indicators is extremely bullish. By my calculation, 54% of stocks are trading above their 50-day moving average. Just 4 weeks ago, it was 5%. That's a huge move in a very short time. This metric continues to climb. It is now at its highest level since early September. * Recent dramatic and unprecedented actions from the Fed, Congress, the Treasury, and the White House have been well received by the markets. These actions may help to prop up the economy, which continues to fall off a cliff. * In a recession, the market typically turns around months before the economy turns around. Now, the bearish case: * The economy, as previously stated, continues to fall off a cliff. I hear pundits speak of a bottom within the next six months, but that is pure speculation. Besides, even if true, a lot depends on how deep this recession goes, how high unemployment goes, how low house prices go, between now and that elusive and uncertain bottom. * My other two indicators remain bearish. * By any time frame longer than a few weeks, the market clearly remains in a strong downtrend. * I am not seeing the strong buying volume which typically accompanies the start of a new bull market. In short, I think we are still in a bear market, and I am skeptical of the present 4-week-old rally. I could change my tune, though, if my indicators improve. 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: -1.7 BEARISH +1.2 BEARISH (2)
Market Internals: 36% BULLISH 54% BULLISH (3)
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Market's Overall Technical Rating: BEARISH BEARISH
Stocks:Cash ratio (average): 48:52 61:39
(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, Saturday, December 20, 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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