Since the markets hit 15-month highs on Jan. 19, we experienced the sharpest and most sudden pullback in global markets since they bottomed in March. But over the past three trading days, the broad-based indices — notably the MSCI Emerging Markets Index — bounced off of their 200-day moving average. This indicates that the long-term upward trend in emerging markets is technically intact.
You’ve already started to dip your toes back into global stock markets by taking half positions in Market Vectors Russia ETF (RSX) and Freeport-McMoRan Copper & Gold Inc. (FCX). Since you only had one-half positions in these, I recommend that you “top up” to a full position here.
I also am upping your existing three positions currently on HOLD back to BUYS — Market Vectors Indonesia ETF (IDX), the iShares MSCI Turkey Invest Mkt Index (TUR) and iShares MSCI South Korea Index Fund (EWY).
Also, on Jan. 20, we raised the stop price on Market Vectors Indonesia ETF (IDX) to $60.50, and on Feb. 5, we dipped below that price on intra-day trading. We overlooked mentioning this intra-day drop in the March issue of Global Stock Investor but I stand by IDX as a recommendation and I want to re-iterate that it is a BUY.
That said, you should treat any recommendations to re-enter the market with some caution.
Because of the uncertainty in the markets, I am tightening the stops on a number of your positions. My reason for doing this is simple. If your positions drop below their lows of last week, we are likely to have entered an extended down leg of the market. In that case, it’s better to be in cash.
Note that you also have VALE S.A. (VALE), Arcelor Mittal (MT) and the iShares MSCI Taiwan Index (EWT) on your Global Stock Investor watch list.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was flat this week. With pressure growing on the Chinese to revalue their currency, I am keeping this actively managed currency at a BUY.
UltraShort Euro ProShares (EUO) ended the week a hair lower as the euro rallied on the news of a bailout for Greece. Nevertheless, with the pressure on the euro firmly on the downside, EUO remains a BUY.
iShares MSCI South Korea Index Fund (EWY) rose 3.34% this past week. With Asia the source of most of global growth, I am moving EWY back to a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) jumped 6.9% as copper bottomed after its huge sell-off in the markets. FCX is a BUY. Tighten your stop to $65.00.
Market Vectors Indonesia ETF (IDX) rose 5.5%, bouncing strongly, and I am moving it back to a BUY. Place your stop at $59.40.
Market Vectors Russia ETF (RSX) soared 5.4% over the week, as risk appetite slowly returned to global stock markets. RSX is a BUY.
iShares MSCI Turkey Invest Mkt Index (TUR) rallied 3.5% this past week. With global markets settling, Turkey is back to a BUY. Raise your stop to $49.40.
P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy.
