It was another down week in global markets this past week. The Dow Jones Industrial Average dropped 1.02%, the S&P 500 fell back 1.05%, and the tech heavy NASDAQ tumbled 1.89%. Emerging markets continued to pull back, as well, with the MSCI Emerging Markets Index down 2.43%. The good news is that markets have steadied over the past two days — although European markets are once again selling off sharply on this morning’s trading.
Your Alpha Investor Letter portfolio had a mixed week. Your positions in Visa Inc (V), Yum! Brands (YUM) and Stratasys (SSYS) all gained last week, even in the face of a broad market sell-off. Your most recent recommendation, Stratasys, even managed a 4.25% jump, confirming the attraction of the “3D printing” investment theme. And despite falling last week, The TJX Companies (TJX) remains a BUY thanks to strong earnings and the resilience of the U.S. retail sector.
At the same time, you were stopped out of Las Vegas Sands (LVS), Statoil (STO) and the Private Equity ETF (PSP). I am putting all of these positions — as well as all of the others we’ve been stopped out of over the past two weeks — back on our “watch list” for potential re-entry when markets settle.
Turning to the current state of the markets…
Markets are extremely oversold by almost every technical measure out there. Typically, when we get a panic low like we did on Friday and then a couple of rally days, the markets return to test that earlier low point — this time about 1,295 on the S&P 500. If that level holds, then markets tend to rally several percent over the next few weeks. But if the S&P 500 violates that low, stocks tend to slide hard over the next month.
I continue to believe that the bullish bounce is more likely, although over the short term you can expect to see a lot of volatility. Global markets are being held hostage yet again to the daily pronouncements of European leaders on efforts to resolve the Greek debt situation — or its exit from the euro. The never-ending saga continues…
Finally, it was good to meet so many of you at the Las Vegas Money Show last week. Its a long trip from London to Las Vegas. But it was worth it as I always enjoy connecting with you personally.
Portfolio Update
MSCI Malaysia Index (EWM) lost 1.50% last week. Australia and Malaysia signed a new free trade agreement Tuesday. This deal is expected to bolster Malaysia’s gross domestic product and make Malaysia one of the largest exporters in the Asian arena. EWM is a HOLD.
iShares JPMorgan USD Emerg Markets Bond (EMB) was flat for the week. Although EMB pulled back last week along with global markets, EMB took a strong bounce directly off of its 200-day moving average. This is a very bullish sign moving forward. EMB is a HOLD.
iShares Singapore ETF (EWS) dropped 2.37% over the past five trading days. EWS bounced in tandem with other emerging market equities and should recover likewise. Technical indicators show EWS as extremely oversold. EWS is a HOLD.
Berkshire Hathaway (BRK-B) dipped just 0.70%. Warren Buffett revealed last Wednesday that he had a 10 million-share stake in General Motors Co. (GM) and a 1.59 million-share stake in Viacom Inc. (VIAB) within his BRK-B fund as of March 31. BRK-B is a HOLD.
iShares MSCI Hong Kong Index (EWH) lost 2.13% last week. EWH gives you low-risk, low-cost exposure to a basket of prime stocks on the Hong Kong market. EWH also pays a 2.59% annual dividend on its $2 billion in total assets. EWH is a HOLD.
Visa Inc. (V) gained 1.53% over the week. Credit card companies such as Visa Inc. are seeing big benefits as third-party card-swipe businesses move the mobile age forward. Visa experiences direct transaction volume upside when mobile payment company PayAnywhere users swipe credit cards, on a point-of-sale basis, via small card readers that attach to their iPhone, Android and Blackberry mobile devices. V paid a $0.22 dividend on May 16. V is a HOLD.
Yum! Brands, Inc. (YUM) rose 1.03%. Yum! Brands, Inc. is the fastest-growing restaurant chain in the world, and CEO David Novak recently stated in an interview that its overseas growth was “just beginning.” YUM! experienced 45% of its sales growth from China last year, and its India sales grew 34% just last quarter. India is expected to be a hotbed of growth for YUM! in the years to come. YUM! is a HOLD.
The TJX Companies (TJX) lost 4.43% over the previous week. Although TJX has experienced some marked volatility during this market correction, it has tested the 50-day moving average twice now and held tight. It would appear that TJX will resume its bullish ways once the current market pullback ends. TJX is a BUY.
Stratasys, Inc. (SSYS) jumped 4.25% last week. Stratasys spent the past three weeks slowly drifting lower, but held up relatively well even as global markets sold off ruthlessly. Since Monday, SSYS jumped back to recover nearly all of the recent losses in just two days in a robust showing of strength. SSYS is a BUY.
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