While Americans celebrated a long weekend remembering the great sacrifices and contributions made by its many fallen soldiers, the rest of the world’s markets were busy rallying. The U.S. market also rallied strongly on Tuesday as traders returned from their Memorial Day holiday.
The International Monetary Fund’s (IMF) efforts to curb some of the damage stemming from Greece’s potential default improved investor sentiment in Europe. The hope of additional austerity measures imposed on Greece was enough to spark a significant rally in financial markets around the world.
Based on several technical indicators that I follow, many global markets were extremely oversold, suggesting that markets have neared a bottom. With the American Association of Individual Investors’ (AAII) “Investor Sentiment Survey” more pessimistic than it had been since August of 2010, this contrarian indicator may signal a turn in the markets, as well.
All this has good news for your Alpha Investor Letter portfolio, as the past week has seen some of the largest gains in your holdings in quite some time. Every position in your portfolio was up over the previous five-day period, with each position gaining an average of nearly 4%. Your Gold Miners ETF (GDX) position once again shined with a respectable 5.08% gain. Beating that was the iShares MSCI South Korea Index (EWY), which rose a whopping 6.64%. However, the winner for the week was JinkoSolar Holding Co., Ltd. (JKS), gaining back all of its previous week’s losses. JKS posted a huge 7.21% gain for the week, driven by Germany’s recent announcement that it wants to phase out nuclear power by 2022. Even our conservative bet on the Chinese yuan, via the WisdomTree Dreyfus Chinese Yuan Fund (CYB), increased by 0.39% for the week.
Several of your positions have penetrated their 50-day moving averages, and I have moved them to BUYs. These include the WisdomTree Japan SmallCap Dividend Fund (DFJ), iShares MSCI Singapore Index (EWS), iShares MSCI Malaysia Index (EWM), iShares MSCI South Korea Index (EWY), iShares MSCI Taiwan Index (EWT), Global X FTSE Nordic 30 ETF (GXF) and JinkoSolar Holding Co., Ltd. (JKS).
Although market sentiment has improved over the past five trading days, the traditional weakness normally found during the summer may dampen this enthusiasm. With both the DOW and the S&P 500 indices bouncing off of their respective 50-day moving averages, we may see a nice short-term bounce in June. But it is unlikely that you will get large moves in the markets between now and September.
Portfolio Update
Guggenheim Timber (CUT) went up 3.32% over the past five days. Japan’s severely limited landmass and forest coverage makes wood a bullish bet for the future as Japan begins its rebuilding process. Approaching its 50-day moving average, this newest portfolio pick is still a HOLD.
WisdomTree Dreyfus Chinese Yuan Fund (CYB) increased a respectable 0.39%. If inflation begins to take hold in China as expected, China’s government will likely use appreciation of the yuan as a controlling measure. Closing directly on its 50-day moving average, CYB is now a BUY.
WisdomTree Japan SmallCap Dividend Fund (DFJ) ended the week 3.61% higher. This fund’s price has just advanced above its 50-day moving average. In addition to this positive move, the 50-day and 200-day moving averages are very nearly crossing over each other. As DFJ moves up above this important line-in-the-sand, prospects are excellent for continued future gains. Closing just above its 50-day moving average, DFJ is now a BUY.
iShares MSCI Singapore Index (EWS) gained 3.42% over the last week. EWS’s chart made a definitive move above its 50-day moving average last Friday, on good trading volume. This often signals a move higher in the near term. EWS is now a BUY.
iShares MSCI Malaysia Index (EWM) rose 3.79% for the week. Emerging markets countries, such as Malaysia, are better insulated today than ever before from negative sentiment affecting other global sectors. Now comfortably above its 50-day moving average, EWM is a solid BUY.
iShares MSCI South Korea Index (EWY) shot up a whopping 6.64% this week. Nokia’s recent negative forecast has greatly improved Samsung’s outlook. This good news for Korea’s largest technology corporation is excellent news for your EWY position. EWY’s recent sharp upwards move finds it just above its 50-day moving average. EWY is now a BUY.
iShares MSCI Taiwan Index (EWT) gained 4.37% over the previous five days. The Taiwanese government is planning to ease its rules on Chinese tourism. The influx of individual tourists from China, and the money they will spend, bodes well for future gains in Taiwanese stocks. This position is a firm BUY.
Market Vectors Gold Miners ETF (GDX) popped again this past week for a huge 5.08% gain. Recent upwards momentum in silver, as well as continued dollar weakness due to Germany’s easing on the Greece situation, may signal strength in future gold movements. Trading below its 50-day moving average, GDX is still a HOLD.
Global X FTSE Nordic 30 ETF (GXF) ended the week 4.19% higher. Making a strong comeback from its recent sharp downward movement, GXF is now above its 50-day moving average and is back to a BUY.
Market Vectors Indonesia ETF (IDX) rose 3.51% this past week. Bouncing handily off of its 50-day moving average, the “5th BRIC” is a BUY.
JinkoSolar Holding Co., Ltd. (JKS) gained back all of its previous week’s loss, and then some, for a big 7.21% gain. Germany’s recent announcement that it wants to phase out nuclear power by 2022 should be bullish news for JinkoSolar. The Japanese nuclear disaster was the primary influence in the German government’s "irreversible" decision. JKS is back to a BUY.
Las Vegas Sands Corp. (LVS) increased 3.57% over the past week. The Macau government just announced a 42% surge in May gambling revenue. They attribute this to the recent influx of Chinese tourists visiting Macau. This can only be good news for the Las Vegas Sands Corp. Although comfortably above its stop price, LVS remains a HOLD, while it trades below its 50-day moving average.
iShares MSCI Turkey Invest Mkt Index (TUR) rose 1.49% during the previous five-day period. This index moved dangerously close to its stop price recently, but regained some precious ground in today’s trading session. Trading well below its 50-day moving average, TUR remains a HOLD.
