Choppy, choppy, choppy are the best words that I can think of to characterize recent trading in global stock markets.
After bouncing off of its 200-day moving average, the MSCI Emerging Markets Index has pulled back near that crucial support level.
The chart of the iShares MSCI Emerging Markets Index (EEM) versus the S&P 500 highlights the current challenges of making money in global stock markets.
Note that the only position that has gone steadily up is your bet against the euro through the UltraShort Euro ProShares (EUO).
But I also want to point out that your picks — almost without exception — are among the strongest relative-performing global markets on the planet.
That applies to iShares MSCI Turkey Invest Mkt Index (TUR), which we stopped out of this morning at a small loss, versus the iShares MSCI Emerging Markets Index (EEM)
… the Market Vectors Indonesia ETF (IDX)
… as well as iShares MSCI South Korea Index Fund (EWY).
I could provide similar charts for your positions in Market Vectors Russia ETF (RSX), as well as your watch list positions in VALE S.A. (VALE), Arcelor Mittal (MT) and the iShares MSCI Taiwan Index (EWT).
That all said, it is hard to draw blood out of a stone. So, I expect to continue the strategy of only dipping into the market carefully with positions that have been relatively strong performers.
Cash isn’t part of my recommendations in Global Stock Investor. But you should be aware that my managed accounts, whose holdings do overlap with many of your recommendations here, are 60% in cash. Your stops on your current positions are also fairly tight. That’s because if your positions drop below their lows of two weeks ago, we are likely to have entered an extended down leg of the market.
Tonight, I am hosting a London Junto meeting entitled “Is China the Next Dubai,” pitting Andrew Leung, a raging China Bull, against one of the earliest skeptical China bears, Hugh Hendry. Hendry became well-known for this “rogue” YouTube video, which highlighted the number of empty buildings during his travels in China just about a year ago. The event has been sold out for 10 days and I have representatives of some of the world’s largest hedge funds attending. I’ve even had requests from as far afield as Shanghai to attend.
With the China bearish case slowly gaining momentum — and some hedge fund managers even setting up bearish China funds — I continue to expect to be extremely defensive in my recommendations moving ahead.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) was again flat as a pancake this week. With China confirming today that the yuan revaluation will be a gradual process, I am keeping this actively managed currency at a BUY.
UltraShort Euro ProShares (EUO) rose 1.6% this week, as the pressure remains on Greece and, by extension, the rest of Europe’s “PIGS.” With the pressure on the euro firmly on the downside, EUO remains a BUY.
iShares MSCI South Korea Index Fund (EWY) took its cues from Wall Street and other markets in the Asia-Pacific region this week, and fell back slightly. As a strong relative performer, EWY is a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) briefly flew past the $77 level before pulling back. FCX remains a BUY. Tighten your stop to $66.00.
Market Vectors Indonesia ETF (IDX) also fell back slightly this week. It remains a BUY.
Market Vectors Russia ETF (RSX) dropped back slightly on increased risk aversion. RSX is a BUY.
iShares MSCI Turkey Invest Mkt Index (TUR) fell back as authorities are investigating whether military officers had any part in planning an alleged coup in 2003. This is just short-term noise. Even though we stopped out of this pick this morning when it opened below our stop price, it already is rebounding. Expect a relatively quick re-entry, once the issue dies down. TUR now is on our watch list.
P.S. Please join me Wednesday, March 3, 2010, at 2:00 pm EST for a FREE, subscriber-only conference when I’ll discuss “Global Megatrends for 2010,” and the best ways to profit from them. All you have to do to participate is answer your phone when we call to connect you on March 3 at approximately 1:55 pm EST, and you’ll be included on the call. However, if you’d like to give us a different number to call on March 3 than the one you originally included with your subscription, simply email us at customerservice@globalstockinvestor.com.
