Markets rallied sharply last week. The Dow Jones industrial average closed above 12,000 for the first time since an earthquake hit Japan more than a week ago, and is now back near its highs on March 11 — the day the earthquake hit Japan.
The most obvious change in global markets as a result of Japan’s nuclear crisis and the violence in Libya has been soaring volatility. The Dow has moved up or down by at least 100 points in four of the five previous trading days.
The star of your Global Stock Investor portfolio this past week was undoubtedly Universal Display (PANL), which ended the week 32.02% higher on stronger-than-expected earnings. This is a volatile stock, but clearly rewarding if you can stomach the ride. You can expect similar volatility from Chinese solar play JinkoSolar (JKS).
Having been stopped out of a number of positions over the past two weeks, you have a lot of positions on your watch list. Positions to keep an eye on for possible re-entry include Freeport-McMoRan Copper & Gold, Inc. (FCX) and Agrium (AGU). I am still bullish on the long-term prospects for both of these holdings.
By now, you know my rule of thumb. Stocks that are trading above their 50-day moving average are a “BUY,” while those that have fallen below it, but have yet to hit their stop price, are “HOLDs.”
I’m going to break that rule in the case of the WisdomTree Japan SmallCap Dividend (DFJ) and recommend that you re-enter your position here. It was right to exit that position when you hit your stop after the earthquake. After all, it was a “Black Swan” event, where the ultimate impact of the tragedy was unclear for many days. But as I noted in yesterday’s The Global Guru, with the extent of the damage in Japan now clearer, it’s time to get back into the market.
Meanwhile, in Asian markets, the Market Vectors Indonesia ETF (IDX) has quietly slipped back above the 50-day moving average, so I am recommending that you re-enter this position.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) rose .28% this past week. Dropping below its 50-day moving average, CYB is a HOLD.
WisdomTree Japan SmallCap Dividend (DFJ) already is rebounding from the sell-off it incurred after the triple disasters of a 9.0 magnitude earthquake, a life-destroying tsunami and the radiation fallout of a nuclear plant meltdown. Your stop price helped to protect you from a potentially big drop in the value of your holdings in DFJ and now the time has come to re-enter this position. DFJ is back to a BUY. Set a stop price of $35.
Global X FTSE Nordic 30 ETF (GXF) ended the week 4.34% higher, as European markets showed remarkable resilience. This ETF benefits both from strong economic growth (Sweden) and the price of oil (Norway). Bouncing back above its 50-day moving average, this bet on the most dynamic part of Europe is a BUY.
Market Vectors Indonesia ETF (IDX) is now back on our buy list, as the market has bounced 5.05% over the past month, up from its sell-off early in the year. Remember, this was probably the single top-performing market in the emerging markets world since the stock markets bottomed in 2009, so its strong relative performance should not come as too much of a surprise. IDX is back to a BUY. Set your stop price at $25.
JinkoSolar Holding Co., Ltd. (JKS) dropped 7.07% this past week. JinkoSolar continues to have a bullish outlook for 2011. It is projecting revenue in the range of $1.4 billion to $1.5 billion, which would be double 2010’s revenue of $705.3 million. Analysts have been moving to raise estimates. Five estimates moved higher for 2011 in the last 30 days, pushing up the Zacks Consensus Estimate by 49% to $7.32 from $4.92 per share. That is earnings growth of 21%. Trading below its 50-day moving average, JKS is now a HOLD.
Universal Display Corp. (PANL) rose a staggering 32.53% this past week, including an eye-popping 19.07% gain last Wednesday. Revenue more than doubled to $10.8 million. Its operating loss narrowed substantially. Universal Display also sees wider marketplace adoption of its PHOLED technology in its 2011 fiscal year. In addition, the company announced that it is offering 5 million shares of its common stock in a registered public offering. After such a huge run, I’d like to see the stock pull back some. But PANL remains a solid BUY. Raise your stop to $34.50.
Market Vectors Russia ETF (RSX) rose 4.09% this past week. Its performance is linked closely to the price of oil. Up 6.7% year to date, Russia is the best-performing emerging market of 2011. Trading above its 50-day moving average, RSX remains a BUY.
Ultrashort Lehman 20+ Year Treasury (TBT) ended the week flat. With Dallas Federal Reserve Bank President Richard Fisher saying that the U.S. debt situation is at a “tipping point,” the fundamental case for this bet against U.S Treasuries remains intact. But with TBT slipping below its 50-day moving average, TBT is now a HOLD.
Vale S.A. (VALE) ended the week 1.07% higher. This stock is seriously oversold, but, like all emerging markets, it technically is just not behaving right. With the stock trading below its 50-day moving average, Vale is a HOLD.
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