Taking Breather after a Bullish Bounce

Nicholas Vardy

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

Global stocks fell Friday as the Nasdaq ended an eight-day winning streak. For the week, the Nasdaq rose 1.6% and the S&P 500 climbed 0.3%.

Your position in Crocs, Inc. (CROX) continues to be a standout. It is up 15.37% in just the last three weeks. Remember, you took 63% profits on half of your options last Thursday, and adjusted your stop on the stock up to $25.25.

After such a strong bounce in the markets, pullbacks are a normal part of the game. The question is whether the market is able to resume a sustained upward trend during what is normally a quiet time of the year. I firmly believe that the market will break out to the upside at some point. This is just an unlikely time of the year for it to do so. Until then, I’m going to stick with picking individual, momentum-style stocks, even as the market pauses for breath.

I spent the last couple of days in Ireland, where I got a chance to view the Irish crisis up close. Among other things, I attended a wedding at Adare Manor, with a group of fellow Stanford graduates.

And yes, I felt like an extra on the set of the movie Four Weddings and a Funeral…

Adare Manor, near Limerick, Ireland

The newspapers in Ireland are all doom and gloom — though the people, less so. The media is particularly angry with the Irish government’s path of self-imposed austerity — and with the European Central Bank’s unwillingness to weaken the euro because of its Germanic obsession with controlling inflation. But that’s the downside of a common currency. Germany is booming. Ireland is suffering. Yet the same monetary policy applies to both. It’s clear that Ireland would have much more economic wiggle room if it had its own currency like Iceland did.

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Evidence of the housing boom (and bust) in Ireland abound, with the countryside dotted by U.S.-style new houses that look like they have been picked out of a catalogue and plunked right alongside ancient country pubs. One small businessman I spoke with was lamenting that all of Ireland’s most talented young people (yet again) were leaving the country, and that this was going to be Ireland’s greatest loss. On the plus side, I saw some signs of “green shoots” in the Irish economy, with the head of one recruitment agency telling me that temporary hiring in Ireland slowly is increasing. That’s always a bullish sign for economic recovery.

Next week, I’m off to Greece, with a Berkeley economist friend in tow, to speak with some old contacts on the state of play in the home of democracy. It’s turning out to be a “European crisis” tour kind of summer…

Portfolio Update

Alliance Resource Partners L.P. (ARLP) rose 1.6% this past week. With the stock now up 18% since you bought it back in January, this bet on the bull market in coal has been a top performer. Trading above its 50-day moving average, ARLP is a BUY.

Avago Technologies (AVGO) dropped 181% its first week in the portfolio, after hitting a new high on Wednesday. Still above its 50-day moving average, AVGO remains a BUY.

CROCS Inc. (CROX) soared 3.58% this past week and now is up a whopping 15.37% in over the past three weeks. Trading above its 50-day moving average, CROX remains a BUY. As I mentioned last Thursday, tighten your stop to $25.25.

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Hansen Natural Corporation (HANS) dropped back 3.14% this past week. Here’s a bullish video on Hansen from a UBS analyst on CNBC. This stock remains a BUY. Raise your stop to $74.50.

Bank of Ireland (IRE) fell 4.5% this past week. Bank of Ireland shareholders are due to gather at an extraordinary general meeting in Dublin this morning to vote on the terms of a rights issue seeking to raise €1.9 billion to strengthen the bank’s capital position. With this bet on the Irish bounce trading below its 50-day moving average, IRE remains a HOLD.

National Bank of Greece SA (NBG) dropped 12.75% this past week. But there are rumors in the market that Greece’s Eurobank is close to a merger with The National Bank of Greece. This would very bullish for the stock. The pullback notwithstanding, NBG is a BUY.

Novo Nordisk A/S (NVO) traded flat this past week. A recent report in the Financial Times shows that Novo Nordisk now has become one of the world’s ten most valuable medical companies. NVO remains a BUY.

Rayonier Inc. (RYN) jumped 1.46% this past week, hitting a record high last Thursday. Rayonier will host a conference call and live webcast at 2 p.m. EDT the same day to discuss these results. Supplemental materials and access to the live webcast will be available at www.rayonier.com. RYN is back to a BUY.

Toyota Motor Corp. (TM) rose 1.14% this past week. Sales of the Prius in 2011 are expected to surpass even the number sold in 2010, Toyota officials say, despite the disastrous earthquake in Japan that limited production of the popular hybrid. Back above its 50-day moving average, Toyota is a BUY.

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