The Global Bull Takes a Breather — and Locks in 19% Profits in Brazil

Nicholas Vardy

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

First, the G-20 meeting this week here in London is unlikely to lead to a consensus in terms of a unified approach to economic policy to take the global markets out of their funk. Second, investor focus is likely to shift to company earnings reports, which won’t be flattering amid a global economic slowdown. Finally, although the U.S market has crossed some widely followed technical indicators like the 50-day moving average, the market is now technically overbought. That makes it a particularly dangerous time to be entering the stock market.

That said, I have more investment opportunities on my Global Bull Market Alert “watch list” than I have had in many months. But I don’t believe the bull market train has left the station for good. There will be plenty of time to hop on the train later at better prices.

Portfolio Update

The Market Vectors Double Short Euro ETN (DRR) bounced 4.6% last week, as the euro resumed its fall against the U.S. dollar. With European economies weaker than the economy in the United States, and the outcome of the G-20 meeting likely to disappoint investors, this is probably the best risk/reward bet in your Global Bull Market Alert portfolio. You should feel comfortable in adding to your position at these levels. DRR is a BUY.

The CurrencyShares British Pound Sterling Trust (FXB) fell sharply on Friday. It has fallen even more in this morning’s trading in London as George Soros — speaking days after an auction of U.K. government bonds failed for the first time in 14 years — said that U.K. Prime Minister Gordon Brown might have to go begging for billions of pounds to the International Monetary Fund (IMF). SELL FXB short.

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Your bets on gold through the SPDR Gold Shares ETF (GLD) and the PowerShares DB Gold Double Long ETN (DGP) should do well on any increase in negative sentiment. With markets likely to correct this week, both of these positions are BUYS.

Your position in the iShares iBoxx $ High Yield Corporate Bond (HYG) broke the $70 level last week for the first time since mid-February. This position goes ex-dividend at the end of this week, and you can expect a dividend payment early next week. HYG remains a BUY.

Last week’s Global Bull Market Alert bet on “Dr. Copper” — through the iPath DJ AIG Copper TR Sub-Idx ETN (JJC) — ended the week flat. It remains a BUY.

Up 19% in the past five weeks, Brazilian oil giant Petrobras (PBR) has been your best performer in the Global Bull Market Alert portfolio. You’ve already booked 48% and 138% profits in the options. With the oil price falling and markets bracing for a down leg over at least the next few days, I am recommending that you SELL Petrobras to lock in your gains

Your Rydex Inverse Government Long Bond Strategy Inverse (RYJUX) ended the week flat, after selling off sharply the previous week in response to the Fed’s announcement of “quantitative easing.” Although the U.S Fed plans to buy U.S. Treasuries to the tune of $300 billion, I remain confident that betting against the U.S Treasuries bubble is a solid move. RJYUX remains a BUY.

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The U.S. Fed's version of "shock and awe" -- its announcement of "quantitative easing" last Wednesday -- put a spanner into your Global Stock Investor portfolio, even as the strong bounce in global stock markets since March 5 is showing signs of petering out.

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