Booking 171.43% Gains in Sina.com… And Hedging Your Bets

Nicholas Vardy

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

Oil prices are soaring, the Libyan dictator Gaddafi looks more and more likely to quash the opposition and Japan suffered a devastating earthquake that may cause a nuclear meltdown.

But there is some good news in your Bull Market Alert portfolio. Sina Corp (SINA) soared 12.84% this past week and your remaining options are now up 171.43%. Sell your remaining options here to lock in your gains.

Although you did not hit your stop in Denison Mines Corp. (DNN) last week as its stock price trended down, it opened below your stop price this morning. The Japanese nuclear reactor situation is obviously a game changer for uranium. As always, I recommend that you close your options at the same time as your stock position.

If overall market sentiment were more positive, I would be recommending new options on both Spreadtrum (SPRD) and Ivanhoe Mines (IVN), as both sold off sharply this past week on no particularly bad news. But given the level of uncertainty in the markets, I am going to hold off.

Overall, you’re more likely to profit from a drop in the markets this week than from a gain. So that is why I am recommending that you buy ProShares UltraShort MSCI Emerging Market ETF (EEV). Set your stop price for EEV at $29.50.

This investment seeks daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the MSCI Emerging Markets Index. Put another way, if emerging markets drop 2%, this position should rise 4%.

The purpose of this position is to act as a general hedge on your other current investments. So, as other stock positions drop, this one should rise, helping to limit your overall losses.

Here’s a word of warning. Because the performance of short ETFs is linked to their daily performance, you are not going to get the performance of EEV that you might intuitively expect. But if emerging markets do fall out of bed this week, you should see a nice pop on this.

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If you want to play options to protect your downside, I recommend the June $45 put options (EEM110618P00045000) on the MSCI Emerging Markets ETF (EEM).

Portfolio Update

Alliance Resource Partners LP (ARLP) fell 5.04% this past week. Having bounced off its 50-day moving average, ARLP remains a BUY.

Cognizant Technology Group (CTSH) ended the week slightly higher, after hitting a new 52-week high of $77.96 last Tuesday. I’m keeping a close eye on when we can best exit our April options. CTSH remains a BUY.

Bank of Ireland (IRE) had a lousy week. But JP Morgan today upgraded its view of the European banking sector to overweight from neutral. This upgrade of the banking sector was based on several factors, including the agreement by euro-zone heads of state to strengthen the 440 billion euro ($613 billion) rescue fund and lower the interest rate on Greece’s bailout. With the stock still under its 50-day moving average, I am keeping IRE at a HOLD.

Ivanhoe Mines (IVN) dropped 11.24%, on no particular news. Investment bank Credit Suisse has kept a “Neutral” rating but raised its target price on Ivanhoe Mines Ltd. to $31 from $28. This bet on the “Mongolian miracle” remains a BUY.

Nabors Industries (NBR) lost 4.6%. With an uptrend intact, and trading above its 50-day moving average, this onshore oil driller remains a BUY.

National Bank of Greece SA (NBG) dropped 2.17% this past week. With JP Morgan upgrading the European banking sector, and the interest rate on Greece’s bailout lowered, NBG remains a BUY.

Novo Nordisk A/S (NVO) ended the week 1.75% lower. This bet on the global diabetes epidemic remains a BUY.

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ELEMENTS Rogers Intl Commodity Agri ETN (RJA) dropped back 6.86% this past week. Food prices are still soaring and this oversold bet on soft commodities remains a BUY.

Sina Corporation (SINA) soared 12.84% this past week and is trading back up at record highs. Remarkably resilient, “China’s Twitter” is a BUY.

Spreadtrum Communications, Inc. (SPRD) dropped 12.7% last week. With a $29 or $30 price target on the stock, SPRD is a BUY.

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January's euphoria in global markets has given way to concern about inflation, oil prices and increasing political risk in emerging markets. The last two months has seen you exit all of your country-related emerging market exchange-traded funds (ETFs). So far, that has proven to be a good decision. Almost all emerging markets -- with the exception of your position in Russia through the Market Vectors Russia ETF (RSX) -- have broken down technically. The chart of the MSCI Emerging Markets

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