Locking in Gains as Market Consolidates

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Markets closed another positive week, with the Dow Jones up 2.04%, the S&P 500 rising 1.49% and the NASDAQ gaining 1.47%. The MCSI Emerging Markets Index soared 3.45%.

Big gainers in your Bull Market Alert portfolio included the iShares MSCI Emerging Markets (EEM), up 3.45%, and Drew Industries Incorporated (DW), which gained 1.24%.

Drew Industries Incorporated (DW) and Dycom Industries, Inc. (DY) each hit a new 52-week high.

Keep an eye out for your stop of $86.20 on Drew Industries (DW) to make sure you book a double-digit percentage gain on this stock even if it pulls back this week.

Also, raise your stop price in Dycom Industries (DY) to $91.00 — the current consensus target price on the stock — to ensure you lock in some gains.

The market has had a tremendous bounce after the brief post-Brexit sell-off.

As such, market sentiment has reached extremely bullish levels.

The CNN Fear & Greed index hit 90 this past Thursday, and closed the week at 89.

BMA

As a contrarian indicator, “extreme greed” on this index is a bad sign. Any time the market gets above 80, the market is overbought and you can expect the market to be near a short-term top. The market has come too far, too fast.

Also, from a fundamental standpoint, let’s not forget that the S&P 500 as a whole is in an earnings recession, so there is little real “profit juice” that will be driving the market forward in the weeks ahead.

As such, I expect stocks to consolidate their recent gains, and the overall U.S. stock market to pull back in the coming week or two weeks.

Exclusive  Myth of Wall Street’s ‘Masters of the Universe’ Exposed

While we have been successful in our rifle shot small-cap stock strategy that we’ve been focused on recently, this is a good week to hold off on a new a new Bull Market Alert recommendation.

However, I am a researching a potential new Bull Market Alert recommendation for next week.

Portfolio Update

iShares MSCI Emerging Markets (EEM) moved 3.45% higher last week. Since the June 23 Brexit vote, emerging markets have been surprisingly strong. China and India are both up an average of 5.5%, Russia has gained nearly 7.25% and Brazil is up almost 10%. This ascent is reflected in EEM’s chart as the fund pushed up past a long-term resistance level of $35 last week to move into new recent highs. EEM is a BUY.

Healthcare Services Group, Inc. (HCSG) fell 5.78% last week after a slight earnings miss. HCSG met its $0.26 earnings per share estimate, but missed on revenue figures. Although revenues rose 9% year over year, the $386.6 million figure did not meet the estimated $392.3 million mark. HCSG announced a dividend of $0.18375 per share, payable on Sept. 23 to holders of record on Aug. 19. HCSG fell below the 50-day moving average (MA) and became a HOLD.

Drew Industries Incorporated (DW) gained 1.24% and hit a new 52-week high last week, only to pull back slightly later in the week. However, you were able to sell all of your remaining DW October $75 option calls for a hefty 141% gain, just as the pullback began. DW is expected to announce earnings on Aug. 4 before markets open. DW remains a BUY.

Exclusive  Riding the Biotech Bull

Spire, Inc. (SR) fell 2.12%. Despite last week’s pullback, SR shares have jumped 27.35% over the past 52-weeks while the S&P 500 index has only gained 2.06% for the same period. SR will report earnings on Aug. 3 before markets open. SR is a BUY.

B&G Foods Inc. (BGS) is the latest addition to your portfolio, and moved 1.95% lower over the past week. Earlier this month, BGS announced plans to consolidate operations based in South Carolina to North Carolina. BGS will report earnings on July 28 after markets close, and consensus estimates call for earnings per share of $0.46 on revenue of $316.56 million. BGS is a BUY.

Sincerely,

Nicholas Vardy

Nicholas A. Vardy

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Eagle editorial director Paul Dykewicz reports on buying opportunities for all investors from the Bulls and Bears debate at this week's FreedomFest conference.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE