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
As expected, the market continued its slide last week. Enough so that it put all three Dow portfolios back under water after they had recovered nicely from January's slide. Maxtor continued falling, as did semiconductors, Pfizer, and even Microsoft. A crummy week.
However, we can feel good that we locked away substantial gains prior to this slide. We stopped UTStarcom at -9%, grabbed a gain of 5% with Sun, and sold three-quarters of Maxtor at an average gain of 68%. Maxtor closed last week right at our average selling price, so we might be able to get a little boost on that performance this week if the stock rebounds a little.
The one disappointment I feel is not taking profits in Ultra Semi when I had them last month. We were up some 8%. Just two Fridays ago the position was up 2.5%, but after last week is now down 2.6%.
All is not lost. The market has been going down pretty steadily and it appears due for a short-term relief rally, probably this week. That should lift our positions enough to give us good exit points. It's not summer yet, although oil is already at what appear to be summer prices. Just imagine what those prices will be when summer is actually upon us. High, I would guess, and that should lead stocks to their usual summer levels: low.
Between now and June, though, we have two weeks of March followed by April and May. That's a lot of wiggle time. Markets don't move in straight lines as recent months have reminded us. Two down weeks against a backdrop of an improving economy is probably enough. Most technicians see the S&P 500 as still being above support. While I expect to see markets generally dropping, I think we'll get some lift before that.
Technology specifically looks ripe for a bounce. Piper Jaffray says that internet stocks are a buy. CSFB suggests that $35 is a strong price support for eBay.
