U.S. Markets are Flat and a Technical Set Up for Biotech Stocks

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

It was a relatively flat, holiday-shortened week for U.S. stock markets with the Dow Jones up 0.56%, the S&P 500 rising 0.41% and the NASDAQ eking out a 0.19% gain.

In contrast, global markets showed some strength, with the MCSI Emerging Markets Index jumping 3.56%.

No wonder the big gainers in your Alpha Investor Letter portfolio were all international names. These included the Cambria Global Value ETF (GVAL), which rose 4.21%; the Vanguard Global ex-US Real Estate ETF (VNQI), which rose 2.51%; the iShares MSCI Philippines (EPHE), which added 2.48%; and the Guggenheim Spin-Off (CSD), which added 2.27%.

Two of these positions, the Guggenheim Spin-Off (CSD) and the iShares MSCI Philippines (EPHE), hit new 52-week highs.

Google Inc. (GOOGL) slipped below its 50-day moving average and fell back to a HOLD.

This week, I want to highlight a few “technical set ups” for two of your current biotech-related positions.

Technical set ups are more short-term considerations I use for my trading services, Bull Market Alert and Triple Digit Trader. But they are also useful for entering some longer positions in The Alpha Investor Letter, as well.

Ideally, when entering a position, you want to look for a pullback in the context of a longer-term uptrend.

And that is exactly what you see in your two biotech-related recommendations, the Market Vectors Biotech ETF (BBH) and Irish pharmaceutical company Actavis plc (ACT).

bbh_040815

Market Vectors Biotech ETF (BBH)

act_040815

Actavis plc (ACT)

As the charts above confirm, both of these positions meet this criterion. Note that the technical indicator on top of the chart, “slow stochastics,” shows that each position is now technically oversold.

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That means that from a short-term perspective, both BBH and ACT present a terrific opportunity to add to your position if you believe, as I do, that the current pullback in biotech is only short term.

Portfolio Update

Berkshire Hathaway (BRK-B) dipped 0.87% during the holiday week as the markets took time off for Good Friday. Berkshire Hathaway announced the purchase of a $560 million, 10% stake in Axalta Coating Systems. Axalta makes coatings that protect a wide range of industrial items including cars, and its stock is up 36% since going public in the fall of 2014. Warren Buffett likes to purchase companies that “do something he can understand.” Coatings, coupled with profits, sound like a classic Buffett buy. BRK-B is a HOLD.

Guggenheim Spin-Off (CSD) added another 2.27% as it continued to enjoy the afterglow of the recent Kraft-Heinz merger news. CSD hit the $49.00 price level just yesterday for the first time in its trading history, breaking out to a new all-time high. CSD is above the 50-day moving average (MA) and is a BUY.

Vanguard Global ex-US Real Estate ETF (VNQI) rose 2.51% last week, bouncing off its 200-day MA and breaking through a long-standing resistance level of $57. Global stock markets are at the beginning of a comeback that could see international real estate’s boat lift along with the broader tide. VNQI’s 52-week high stands near $60, and this exchange-traded fund (ETF) will likely recapture this level in the months ahead. VNQI is currently a BUY.

Markel Corp. (MKL) gained 0.50%. The “Baby Berkshire” remains on an uptrend, as it swung back towards its 52-week high last week — a level it will likely breach this week or next. All systems remain a “go” for MKL, and this position remains a BUY.

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Skyworks Solutions Inc. (SWKS) fell 1.54% last week as it traded sideways for another week — just below its all-time high. Earnings season begins soon, and SWKS is scheduled to report earnings on April 21 after the market’s close. Analysts at Pacific Crest have raised their price target for SWKS to $110, signaling a 14% move up from yesterday’s close. SWKS is a BUY.

Union Pacific Corporation (UNP) dipped 0.43%. UNP has been struggling and is currently below its 200-day MA. UBS has a price target of $128 in the stock with a “Buy” rating — 18.7% above yesterday’s close. UNP reports earnings on April 23 after markets open and could offer an upside surprise. UNP is a HOLD.

iShares MSCI Philippines (EPHE) added 2.48% last week, hitting a new 52-week high to rebound from its 50-day MA in past weeks. Money has been flowing into European markets since the start of the year. However, Asian funds have seen just as much action. EPHE is part of a group of markets including China, Japan and Taiwan that have all been on the rise. EPHE is a BUY.

Newly Updated Special Reports

As a courtesy, I invite you to view the newly updated version of The Top 12 Stocks for 2015, which features three of my top investment recommendations from the recent Orlando MoneyShow, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. Also check out other recent reports: My Safest Bet on Booming Biotech, Alpha Opportunities: Where the Smart Money is Investing Now, Buffett-Beating Investment Strategies: 3 Ways to Outperform Berkshire Hathaway, Hedge Fund Secrets of the Masters and The $19 Trillion Key to IoT. These reports and others are available FREE on my website to you.

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Nicholas Vardy

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