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Please read carefully our disclaimers at the end of this newsletter. Weekly Status Report: Contents
Typical Client 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 August 11, 2010) Last week was ugly. The market had been generally trending higher since early July, but it peaked Monday, and fell for the rest of the week, with most of the downside occurring on Wednesday, after the Fed's policy statement. The economy is faltering, and the Fed has run out of ammunition. One of my most important jobs is to detect as early as possible important turning points in the market's direction. If we are in an uptrend, and the market takes a dive, does this signal a change of trend? Should I wait for even lower prices? Or treat the dip as a buying opportunity? One can never be sure, but, in the present case, I favor the change-of-trend hypothesis. One reason is that my NASDAQ Timing Model gave a repeat bearish signal on Tuesday. Also, my most important indicator, the one based on the performance of my stock picks, turned bearish. So, on Wednesday, I issued a bearish alert, and I sold off most of our stocks, moving our portfolios from 16% cash to 77% cash in one day. Last week, in my view, represents an important shift in market psychology. Market risk has suddenly become higher than normal. The path of least resistance is probably down. Deen Capital accounts gave back -5.1% last week, versus a -3.7% drop in the S&P. I expect to underperform at bullish-to-bearish transitions, as the first wave of selling always strikes when we are holding a high-risk aggressive portfolio. If there are further waves of selling, as I think likely, we should outperform. Year-to-date, the scorecard now reads: Deen Capital -0.2%, S&P -2.1%. I believe further upside awaits later this year, but let's wait for this downward move to play itself out. Right now, I favor cash. My Three Primary Technical Indicators:
Prior week Now
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NASDAQ Timing Model (Ver.10r): BEARISH BEARISH (1)
Last signal: BEARISH on Aug 10, 2010
Performance of Recent Stock Picks: +5.0 NEUTRAL -5.1 BEARISH (2)
Market Internals: 75% BULLISH 51% NEUTRAL (3)
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Market's Overall Technical Rating: NEUTRAL BEARISH
Stocks:Cash ratio (average): 92:8 22:78
(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, August 14, 2010
* Buy prices shown are net after commissions. Stocks Sold Over Past 13 Weeks
* Buy and sell prices shown are net after commissions. 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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