A Bullish Outlook for 2017 — and Locking in Triple-Digit-Percentage Gains

Nicholas Vardy

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

It was a broadly flat week for global stock markets, with the Dow up 0.10%, the S&P 500 down 0.60% and the Nasdaq eking out a 0.07% gain. The MSCI Emerging Markets Index continued to struggle and dropped 3.58% over the course of the week.


NVIDIA Corporation (NVDA) had another monster week, soaring 15.36%. With the stock up 121.80% since I recommended it on June 20, this position is now the single-best performer in your Alpha Investor Letter portfolio. Raise your stop to $95.00 to lock in at least a 100% gain in this stock.

Your other Alpha Investor Letter positions fared well, with 11 of your 19 positions gaining over the course of the week.

This week, I am recommending that you close your positions in Intuitive Surgical Inc. (ISRG) and Illumina Inc. (ILMN) at a loss as we look to reduce our exposure to the overall stock market.


All but two of your remaining positions are trading above their 50-day moving averages and remain BUYs.

You also hit several of your tightened stops from last week.

Specifically, you hit your stops in:

Albemarle (ALB) at $89.85 to lock in a 5% gain.

Vanguard Russell 2000 Index (VTWO) at $108.00 to protect a 20% gain.

Phillips 66 (PSX) at $86 to lock in 20% gain.

The extreme optimism in the market continues to worry me, at least over the short term. The CNN Fear and Greed Index, which tracks seven separate measures of market sentiment, is firmly entrenched in “greed”mode. The Consumer Confidence Index is now at its highest level since July 2007. When too many investors are on one side of the trade, you eventually run out of buyers.

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However, I see two crucial factors converging, which could send the U.S. stock markets surging by double-digit percentages in 2017.

First, the fog of the earnings recession in the S&P 500 has lifted. This was always somewhat of a red herring, with the energy sector bearing the brunt of the weak headline numbers.

Today, energy stocks are recovering, with Dow components Chevron (CVX) and ExxonMobil (XOM) expected to grow earnings by 277% and 84%, respectively. Other S&P 500 sectors are also gathering steam.

The current forecast of 11.5% earnings growth and 5.9% revenue growth for the S&P 500 are the best since 2013. The Dow Jones Industrial Average fares even better, with earnings expected to surge 14%.

Second, U.S. stocks have a strong recent history of outperforming in the first year of a presidency. Since the year 2000, stocks have had three 20%-plus years: 2003, 2009 and 2013. Note that two of the three recent 20% gains came the year after a presidential election.

Finally, I will be taking my traditional holiday break next week. So as this is the final weekly Alpha Investor Letter Hotline for 2016, I want to wish you and yours a Merry Christmas, Happy Holidays and a Happy and Prosperous New Year.

Look for your next Alpha Investor Letter update on Jan. 4.

Portfolio Update

In column one, you will find the latest closing price of your position (“Last”).

In column two, you will find your position’s performance over the previous five trading days (“5D %Chg”).

In column three, you will see whether your position is above or below its current 50-day moving average (“50D MA”).

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A position is a BUY if it is trading above its 50-day moving average and is highlighted in GREEN.

A position is a HOLD if it has dropped below the 50-day moving average and is highlighted in RED.

Finally, in column four, I am including your positions’ performance over the past month (“1M %Chg”).

Click here to view the Portfolio Update table.

Nicholas Vardy
Nicholas A. Vardy

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