Last week marked the beginning of a big bounce in global stock markets. The Dow Jones Industrial Average was up 2.95%, the S&P 500 rose 3.94%, and the NASDAQ shot up 4.06%. The MSCI Emerging Markets Index outperformed all of the U.S indices by soaring 5.50%.
The performance of your Alpha Investor Letter portfolio was decidedly bullish, with many of your positions up significantly, and their technical outlooks decidedly positive.
The big gainer in your Alpha Investor Letter portfolio was Stratasys Inc. (SSYS), which shot up 12.83%, after announcing a joint initiative with the U.S. Department of Energy. Shooting through its 50-day moving average, Stratasys is back to a BUY. Ditto for your position in the MSCI Malaysia Index (EWM), which also gained 2.53%.
With Obamacare surviving the Supreme Court, your bet on biotech iShares Nasdaq Biotechnology (IBB) rose 4.81%. Visa Inc. (V) shot up 4.41%. Even Berkshire Hathaway (BRK-B) — normally not a big mover — shot up 3.95%, adding several billions of dollars to Warren Buffett’s net worth. Only YUM! Brands Inc. (YUM) was down for the week, dropping 2.07%.
As result of the markets’ recent bullish move, several of your watch list positions moved above their 50-day moving averages and are back to “Buys.” These include The Wisdom Tree Japan SmallCap Dividend ETF (DFJ), stop price $39.00; the Market Vectors Indonesia Index ETF (IDX), stop price $24.00; the PowerShares Global Listed Private Equity Portfolio ETF (PSP), stop price $7.80; the iShares MSCI Singapore Index ETF (EWS), stop price $11.20; and Statoil ASA (STO), stop price $21.00.
That’s actually quite a big — and perhaps surprising — shift in your Alpha Investor Letter portfolio.
We haven’t had this many stocks on the “watch list” move to buys since back in November. But recall that move was right on the cusp of a strong run in the markets through the end of February. Although it is more unusual to have a move like this in the summer — normally a quieter, more challenging time, it is important that we stick to the discipline of buying positions when they have reclaimed their 50-day moving average.
On a personal note, London is busy readying itself for the Olympics. As it happens, the volleyball tournament is set to be played a few hundred yards from my new place. Between the security and roads being shut, it should make for a chaotic three weeks in late July and August. Mitt Romney may not know it yet, but his fundraising trip to London on July 26 is right on the eve of the start of the Olympics. I predict he’ll be spending a lot of time in traffic.
Finally, recently I’ve been watching the video version (on Apple iTunes) of Joseph Ellis’ book “The Founding Brothers” — which traces the lives of the founding fathers through the War of Independence and the early days of the U.S. Republic. It’s fascinating to be reminded that early debates between Thomas Jefferson and Alexander Hamilton on the role of the government in society during the Washington’s term as president were virtually the same as the ones taking place today. Jefferson even founded a newspaper — think of it as the Fox News of its day — to argue his cause for limited government.
There is truly little new under the political sun…
Have a great 4th of July!
Portfolio Update
MSCI Malaysia Index (EWM) gained 2.53% last week. EWM has been ranging between the 200-day and 50-day moving averages, testing them over the past three weeks, and even managed to breach the 50-day moving average twice. EWM may be preparing for a move upwards as many of the emerging market stocks are below a price-to-earnings ratio of 10, and their central banks have not yet needed to do much economic stimulus. EWM is back to a BUY.
iShares JPMorgan USD Emerg Markets Bond (EMB) rose 1.04%. EMB jumped above the $114.25 resistance level last week on heavy volume. EMB has an average three-month trading volume of 693,000 shares a day, but Monday’s jump occurred on a staggering volume of 4.5 million shares. This paints a very bullish picture for the future of EMB — making EMB a strong BUY.
Berkshire Hathaway (BRK-B) added 3.95% over the past five trading days. In another show of bullishness, BRK-B powered above a well-established resistance level. BRK-B is a BUY.
Visa Inc. (V) rose 4.41% for the week. Continuing a recurring theme for your portfolio this week, Visa Inc. also broke through a major resistance level, and managed a new 52-week high. The House Subcommittee on Financial Institutions and Consumer Credit held a recent hearing where several analysts predicted an “explosion” in mobile payment services. Predictions show global mobile payment transactions reaching $617 billion as soon as 2016 — from just $171.5 billion in 2012. Very few industries in the history of the world have experienced this level of growth. V is a BUY.
Yum! Brands, Inc. (YUM) lost 2.07%. YUM touched its 200-day moving average last Friday, which also happens to be a major supporting price level, and then managed a good bounce on Monday. The Alpha Investor Letter portfolio follows a strict “buy above the 50-day moving average” rule. If YUM follows through from the 200-day moving average, this would mark a significant buying opportunity. YUM will pay a $0.28 dividend on July 11 and is scheduled to report earnings on July 18. YUM is a HOLD.
The TJX Companies (TJX) gained 1.84% over the previous week. TJX bounced off of its 50-day moving average, not having appreciably breached its 50-day moving average since September 2011. The recent test was convincing, as TJX is close to hitting another all-time high. TJX is a BUY.
Stratasys, Inc. (SSYS) rocketed 12.83% last week in a strong move, taking the stock back above the 50-day moving average. Stratasys announced a key partnership with the U.S. Department of Energy (DOE) last week, and its 3D modeling technology will be the centerpiece of their joint efforts. This venture will focus a portion of the significant resources of the DOE on furthering Stratasys’ 3D printing technology. And, the goal of this effort is nothing short of “making the entire U.S. manufacturing process more competitive and energy efficient.” This is a major development for the future of Stratasys — and its stock price. SSYS is a BUY.
iShares Nasdaq Biotechnology (IBB) rose 4.81% for the week. IBB pushed strongly to a new 52-week high after two weeks of horizontal consolidation. With the U.S. Supreme Court sparing Obamacare, there will be more money flowing into healthcare and biotech companies — a lot more. With IBB, you’ll have a chance to make back some of Obamacare’s new “tax” from profits reaped on your successful investments. Of course, in the end, the “tax man” will get a cut of that, too. IBB is a BUY.
P.S. Tomorrow, July 4, 2012 marks the 236th year of America’s Independence. It also marks the continuance of your financial independence. For this week only, renew your subscription to Alpha Investor Letter and receive four extra months FREE! For $149, you’ll receive 16 issues of Alpha Investor Letter — that’s less than $10 an issue! Order now this deal expires Sunday, July 8. Happy Independence day!
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