Market Stabilizing, Good News From Greece

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
Last week finally offered a respite from the relentless bad news in the stock market over the past month, even though the last two weeks of August are traditionally the slowest or second-slowest trading weeks of the year.
 
The S&P 500 rallied 4.7%, marking the first weekly gain in more than a month. Stocks rose in four of the five sessions, though thanks to the continued volatility, it hardly felt like it. Nevertheless, Warren Buffett’s investment in Bank of America and a potential end to the Libyan civil war improved the market’s tone palpably. Fed Chairman Ben Bernanke failed to announce a “QE3” on Friday. The market took that as bad news — but it then quickly rebounded.
 
The market’s strong performance was especially good news for your bet on the ProShares Ultra S&P500 (SSO), which ended the week 9.41% higher. This position should continue to do well as the market recovers.
 
There also was good news from Greece today in connection with your holding in the National Bank of Greece (NBG). Two of the other big players on the Greek banking scene — Alpha Bank and Eurobank — are expected to announce a merger today. This news has sent the shares of NBG soaring 31% in early morning trading in Greece. Of crucial importance is that the merger involves an investment by the Qatar Investment Authority. Whenever private equity investors get involved in “turnaround plays,” it often signals a vote of confidence in the entire sector.
 
As I have emphasized many times before, you should view your holdings in both Bank of Ireland (IRE) and National Bank of Greece (NBG) as options that do not expire. That means they are news-driven, highly volatile positions that offer the potential for big gains. The fact that both the Irish and Greek banking sectors have attracted “smart money” in the form of private equity investments supports my investment thesis in these two positions. And I continue to hold both positions personally.
 
Overall, I still believe that we have successfully re-tested the Aug. 9 lows. That does not mean smooth sailing ahead. But it does mean that we can look forward to more “normal” market action in the weeks ahead. And your current Bull Market Alert portfolio is well-positioned to gain from this.
 

Portfolio Update

 
ProShares Ultra Silver ETF (AGQ) fell 7.15% last week. Silver suffered from “precious metal collateral damage” this week as profit taking hit the overbought gold market. This is likely a good time to add to your position as AGQ takes a textbook bounce off of its 50-day moving average. AGQ remains a BUY.
 
Arcos Dorados Holdings Inc. (ARCO) gained 3.54% during its first week in your portfolio. With Citigroup putting a $32.00 target price on the stock — 32% higher than its current level — there is plenty of upside in this position. ARCO is a BUY.
 
Alliance Resource Partners L.P. (ARLP) gained 1.80% this past week. The outlook for coal remains solid for years to come as 80% of global electricity production comes from coal. ARLP is below its 50-day moving average and remains a HOLD.
 
Bank of Ireland (IRE) fell 2.40% during the past five trading days. The bank reduced its pre-tax loss significantly to $1.03 billion from $1.88 billion a year ago, primarily due to a 22% drop in impairment charges to cover underperforming loans. IRE remains a BUY.
 
National Bank of Greece SA (NBG) lost 18.63% last week, as the Greek banking sector hit new lows. As I noted above, the good news is that NBG shares are up 31% in this morning’s trading, as two rival banks — Alpha Bank and Eurobank — are expected to announce a merger, signaling a further turnaround in the sector. I know this is a tough one to hold onto, but I’m still convinced this will be big money maker. NBG is a HOLD.
 
Toyota Motor Corp. (TM) rose 1.34% last week. Toyota just unveiled its new 2012 Camry model. This seventh-generation automobile has been available in the United States since 1983 and has been “the best-selling car” in America. TM is currently a HOLD.
 
ProShares Ultra S&P 500 (SSO) jumped 9.41% in the past week. SSO has delivered as expected, capturing a short-term rebound in the market. Assuming the rebound continues, SSO will be a great complement to your other holdings as the market recovers. SSO is a BUY. Raise your stop to $35.50.
 

 

Exclusive  Syria Tension Pushes Stocks to Monthly Loss; Survey Says Europe is Back in the Mix; Banks May Raise Rates to Attract Depositors

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The markets continued last week’s volatile ride into this week. Major U.S. indexes pulled back sharply at the end of last week, but they opened this week bouncing off of their recent lows. 

I believe we are seeing a classic case of a panic, followed by a bargain-hunting bounce, followed yet again by a re-test of the previous lows. It is typical to see a one to three-day rally right after a “crash” (or “mini-crash”), followed by a re-test of the rece

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