Yesterday’s sell-off on Wall Street dragged the major indexes to within a hair’s breadth of the multiyear lows they touched in November 2008. However, several markets rebounded late in the session as U.S. futures pointed to a modest recovery on Wall Street today.
Your Global Stock Investor portfolio had a volatile week. Your position in PowerShares DB Commodity Double Short ETN (DEE) hit another record high of $97.86 yesterday. DEE soared 8.61% during yesterday’s sell-off, proving its mettle as a hedge against market downturns. DEE is one of the few ETFs around that remains established in a solid uptrend — although it is prone to sharp sell-offs as occurred in mid-December.
If you have more of a short-term horizon, you may want to take some profits on your position at these levels. But because DEE is still trending solidly upward, I am not recommending that you sell out of your entire position. Move your stop to $74.00. Until DEE consolidates its gains, however, I am moving it to a HOLD.
Your defensive holdings in the two Asian currencies also held up well during yesterday’s sell-off. The Chinese yuan, through the WisdomTree Dreyfus Chinese Yuan Fund (CYB), barely budged, and still is locked within its established trading range of $25.10 to $25.25. It remains a HOLD.
Although the CurrencyShares Japanese Yen Trust (FXY) has massively outperformed the U.S. S&P 500 during the past six months, its upward momentum has flagged, dropping below its 50-day moving average for the first time since September 2008. As result, I am moving FXY to a HOLD.
After hitting record highs the previous week, the UltraShort Lehman 20+ Treasury ProShares (TBT) ended the week flat. The fundamentals behind this trade — a massive increase in U.S. government debt to pay for the Obama stimulus package — are still intact. TBT is a BUY.
Your stock holdings, Millicom International (MICC) and Nextel Holdings (NIHD), as well as your most recent pick, Chemical & Mining Co. of Chile Inc. (SQM), all sold off sharply yesterday. While I am keeping MICC and NIHD at a HOLD, SQM is still in a firm uptrend and a BUY.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) continues in its role as a rock-steady performer, even as Timothy Geithner made some conciliatory noises toward the Chinese at the G-8 summit in Rome. I am keeping CYB at a HOLD.
PowerShares DB Commodity Double Short ETN (DEE) hit a record high of $97.86 yesterday, as the oil price tumbled back down below $35. After the recent sharp gains in this position, I am temporarily moving it to a HOLD. Move your stop to $74.00.
The CurrencyShares Japanese Yen Trust (FXY) fell this past week on the news that Japan’s economy shrunk by 3.3% in Q4 of 2008, its fastest contraction in 35 years. With the Japanese yen having fallen below its 50-day moving average for the first time since September, I am moving FXY to a HOLD.
Millicom International (MICC) had a solid run up to $46.72, before falling sharply on yesterday’s sell-off. Despite announcing better than expected earnings last week, because of the unease in equity markets, I am keeping it at a HOLD.
Nextel Holdings (NIHD) fell back this week on negative market sentiment. I am keeping NIHD at a HOLD.
Chemical & Mining Co. of Chile Inc. (SQM) sold off sharply yesterday. Nevertheless, with its strong upward momentum intact, this play on the explosion of demand for lithium remains a BUY.
UltraShort Lehman 20+ Treasury ProShares (TBT) dropped back from its record highs this past week. With the U.S. government expected to borrow over $2.5 trillion in 2009, look for interest rates to rise. TBT is a BUY.
