Locking in Double-Digit Percentage Gains on Your Bet against the Euro

Nicholas Vardy

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

As a result, you were stopped out of your bet against the euro through the UltraShort Euro ProShares (EUO) for an 11.1% gain. Ironically, net speculative bets against the euro increased to a net value of $11.2 billion from the previous week’s $10.9 billion. Over the medium term, I expect the market to return to the euro-zone debt story, eventually sending the euro to parity with the dollar. So we may re-enter this position in the weeks ahead. But as a result of the euro’s recent rally, I also am moving your bet on the U.S. dollar through the PowerShares DB US Dollar Index Bullish ETF (UUP) to a temporary HOLD.

Last week’s bet on the yellow metal through the SPDR Gold Shares (GLD) took a hit in its first week in the Global Bull Market Alert portfolio. I believe this is a short-term correction in an otherwise bullish trend, and offers a terrific time to add to your position.

Weak manufacturing data from China, poor initial jobless claims in the United States and disappointing pending home sales continue to weigh on risk appetite and investor sentiment. As a result, you were stopped out of the Market Vectors Indonesia ETF (IDX) for a quick gain of 4.45% over the last three weeks.

Although most global markets are rallying today, the major stock market indices continue to trade below their critical 200-day moving averages, even as the S&P 500 has sliced through critical technical levels. Overall, defense remains the name of the game.

Portfolio Update

iShares MSCI Chile Investable Mkt Idx (ECH) traded slightly down last week as global markets consolidated their gains. After clocking a rare positive performance among global markets in Q2 of 2010 with a 3.19% gain, Chile remains a BUY.

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iShares FTSE/Xinhua China 25 Index (FXI) fell, as jitters concerning China’s economy resurfaced. With China resuming its downtrend in already shaky global markets, I am moving this position back to a SELL SHORT.

CurrencyShares Japanese Yen Trust (FXY) jumped to $113.13 on Thursday, before ending the week 1.67 % higher. With the yen due for a pullback, tighten your stop to $111.00 to lock in your gains. I am moving FXY a temporary HOLD.

SPDR Gold Shares (GLD) dropped sharply on Thursday, on good news from Europe and bad news from the United States. This is just a blip in an otherwise long-term upward trend. With spot gold trading up this morning, GLD remains a BUY.

PowerShares DB US Dollar Index Bullish ETF (UUP) traded lower this week. With the euro rallying, and the Greenback pulling back and trading near your stop of $24.00, UUP is now a HOLD.

P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy or on my new blog, NickVardy.com.

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Yesterday marked a sharp drop in global markets, with the MSCI Emerging Markets Index dropping 4% and the MSCI EAFE Index markets falling 3.4%. Both of these broad measures of global stocks are trading below their 200-day moving averages.


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