Global stock markets continued to recover over the past week, with markets up across the board for the past three trading days. This was reflected in your Global Stock Investor portfolio where all but two of your stock-related positions rose at least 4%.
Your best-performing position for the week was global steel giant Arcelor Mittal (MT), which ended the week 7% higher. Several other positions in your Global Stock Investor portfolio also hit highs for the year, including the Market Vectors Russia ETF (RSX), the iShares MSCI South Korea Index Fund (EWY), Brazil’s VALE S.A. (VALE), the iShares MSCI Turkey Invest Mkt Index (TUR) and Market Vectors Indonesia ETF (IDX). Copper play Freeport-McMoRan Copper & Gold Inc. (FCX) also performed strongly. Note that I have further tightened the stops on many of these positions.
The rally since the market bottomed in early February has been extraordinarily steady, and virtually without any pullback. As impressive as the rally has been, I am struck by two things.
First, I am amazed how quickly the sharp correction in January and early February — more than 15% in emerging market stocks — has faded from the memory of investors. This, in my mind, fits the economist J.K. Galbraith’s observation that “the financial memory is very short.” Greed has replaced fear with astonishing quickness.
Second, virtually all markets across the globe are now firmly in overbought territory. That doesn’t mean that they can’t continue to power ahead in the coming weeks. But it does mean that they, at some point, are due for a pullback. I’m not going to recommend that you close any positions based purely on this basis. But you should prepare yourself for a correction at some point and, as always, stick to your stops.
Market Vectors Brazil Small-Cap ETF (BRF) rose this last week, as both the Brazilian stock market and the Brazilian currency, the real, firmed against the U.S. dollar. Probably the most oversold among all global markets, Brazil — and BRF — remains a BUY.
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) rose slightly this past week. The London Financial Times reported that Ba Shusong, a government economist, told reporters at a Chinese Foreign Ministry gathering in Beijing today that China may allow the yuan to float higher. CYB remains a HOLD.
UltraShort Euro ProShares (EUO) ended the week a hair higher. With the crisis in Greece yet to abate fully, and economic recovery dragging compared with the United States and Asia, your bet against the euro remains a BUY.
iShares MSCI South Korea Index Fund (EWY) jumped 4.4% this past week, as South Korea hit new highs for the year. Samsung, a large component of EWY, announced Tuesday that it expected to post a record 4.3-trillion-won operating profit for the January-to-March quarter, thanks primarily to a boost in computer chip prices as demand outstripped supply. That’s a seven-fold increase from the same period last year. EWY remains a BUY. Raise your stop to $46.25.
Freeport-McMoRan Copper & Gold Inc. (FCX) rose another 4.38% this past week, and is flirting with yearly highs. With “Dr. Copper” breaking out toward the upside to new highs, FCX remains a BUY. Raise your stop to $76.00.
Market Vectors Indonesia ETF (IDX) hit yet another record high of $74.22 yesterday, ending the week 4.76% higher. With Indonesia continuing to cement its position as the “next BRIC,” IDX remains a BUY. Raise your stop to $67.50.
Arcelor Mittal (MT) rose just over 7% this past week. With global steel prices set to rise by up to a third after miners and steelmakers recently agreed to a ground-breaking change in the iron ore price system, this cyclical play on global growth remains a BUY. Raise your stop to $40.00.
Market Vectors Russia ETF (RSX) rose by 4.6%, hitting yet another yearly high of $35.71 yesterday. As the Russian stock exchange remains a leveraged play on rising oil prices, RSX remains a BUY. Raise your stop to $32.25.
iShares MSCI Turkey Invest Mkt Index (TUR) rose 4.98% this week, hitting a yearly high of $60.70 on Monday. Goldman Sachs recently projected that Turkey’s $620-billion economy could move ahead of Germany’s to become the third-biggest in Europe by 2050, behind Russia and the United Kingdom. TUR remains a BUY. Raise your stop to $52.50.
VALE S.A. (VALE) rose a relatively subdued 2.16% this past week, hitting yet another new high for the year. In a sign of the growing shift toward Asia, this Brazilian mining giant is now considering a listing in Hong Kong or Shanghai. VALE remains a BUY.
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