11/14 Kelly Letter Topics
Weekly market review
The bottom holds
Big bounce volume
Recession projections
The magic midpoint
LevMark Timer holds
Crocs is dying
Hope for Goldman
Importance of retest
I hope you were able to take advantage of the cheaper prices the market offered up in the past few weeks. If so, you're already sitting on some hefty gains as the winter rally takes off.
Friday was a great day, and capped off the third straight week of gains. The October Retail Sales report came in at 0.2%, better than the expected 0.1%. That put to rest nagging concerns that some investors have had recently about a weak holiday sales season. The market broke through layers of technical resistance, going above and beyond the hope that it could merely sustain its recent gains.
Guess what sector led on Friday? None other than technology, where I invest most of my money and where I most often suggest that you invest. For me, it's generally cash or technology. I've found that with a close eye on the prices of a few closely-followed tech stocks, I can get more than the market's average annual 10% return in just a few months while spending most of the year safely in cash. I've done that a few times with Sun Microsystems and am now in the process of doing it with Maxtor.
Most recently, here's what's working for me:
- Maxtor up 21% since October 21st
- UTStarcom up 13% since November 8th
- ProFunds Ultra Semiconductor up 2% since last Monday
You can track these and other investments I've suggested on the new current picks area of my strategies page. Also, I track top performers in "Kelly's Command Center", the box at left. You'll also find my Dow Strategies there.
Which, incidentally, are all in the green after last week. You'll recall that Double The Dow was down 13.7% for the year just three weeks ago.
Maxtor is providing the most excitement, however. It rose 11% on Friday alone. There was no major news driving it, just a bull market in progress and looking for the cheapest tech stocks on the map. That was my plan in buying Maxtor all along, so it's vindicating to see it play out. There have been a lot of tech doubters in general and hard-drive company doubters specifically. While Maxtor was sold to ridiculous lows on bad news in October, it remains a solid company. For more info, see my October 23rd article.
A rapid rise like this leads to inevitable questions from late-comers about whether it's too late to get in on the gains. No, it's not too late yet, but it's getting to be. I think any investment in Maxtor under $4 will prove profitable. Ditto ProFunds Ultra Semiconductor below $20 and UTStarcom below $19. While Double The Dow has gained 17% over the past three weeks, it's still up just 1% so far this year. If we get another double digit return for the year, most of it lies ahead.
As always, don't get overly jubilant. This pace can't last forever; we will see some kind of pullback. Nonetheless, the intermediate-term trend is up.
