The Roaring Lion Goes out like a Lamb

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
The first quarter came in roaring like a lion and went out like a lamb. Although the first quarter of 2012 was the best for U.S. markets since 1998, the much-anticipated “window-dressing,” where institutional investors normally buy positions in an attempt to pump up their quarter-end numbers, failed to materialize. 
All major U.S. market averages closed the week flat. The DOW Jones ended the week up 0.01%, the S&P 500 Index closed up 0.06%, the tech-heavy NASDAQ Composite fell just 0.22%, and the MCSI Emerging Markets Index dipped just 0.30%. Talk about a wash…
Your Alpha Investor Letter portfolio did better. Your positions in Ford Motor Co. (F), MSCI South Korea Index (EWY) and MSCI Malaysia Index (EWM) each rose roughly 2% for the week. Market Vectors Indonesia Index ETF (IDX) finally showed some signs of life and jumped 4.07% to be the big winner of the week. Most of your other positions ended the week flat.
Although markets didn’t move much last week, several of your positions did change their BUY/HOLD recommendations. As you know, I rank a position trading above its 50-day moving average as a “BUY,” while any trading below the 50-day moving average is ranked as a “HOLD.” Based on that reasoning, the Market Vectors Indonesia Index ETF (IDX) and Ford Motor Co. (F) each changed to a BUY, while Market Vectors Russia ETF (RSX), iShares MSCI Hong Kong Index (EWH) and Statoil ASA (STO) moved to HOLD. A common theme among positions on HOLD is weakening commodity prices.
Also, note that I have raised your stops on Yum! Brands, Inc. (YUM), MSCI South Korea Index (EWY), MSCI Malaysia Index (EWM) and the Market Vectors Indonesia Index ETF (IDX).
With the second quarter 2012 upon us, and recent lackluster news out of the Fed regarding future stimulus, markets may drift sideways for a week or two weeks as earnings season approaches. Markets will react — for better or worse — once earnings reports begin to shed further light on the state of the economy.
Taking a slightly longer view, April is traditionally a strong month for markets and I am optimistic that the 2012 rally will continue for a while. The real test will come as we enter May, and the start of the traditionally slow summer season. On the one hand, I am aware of the old trading adage, “Sell in May and go away.” On the other hand, the strong rally of 2009 continued through the summer months, as well, yielding some big gains. And the overall market has been strong since you re-entered in a big way in late October and November.

Portfolio Update

WisdomTree Japan SmallCap Dividend Fund (DFJ) fell 0.67% over the past week. Even though Japan encountered significant tailwinds during the past year, Japanese markets have managed to log their best quarter in over twenty years. John Vail, chief global strategist at Nikko Asset Management, recently stated that he expects to see a 30% rebound in earnings. DFJ is a BUY.
Las Vegas Sands Corp. (LVS) came in flat. The story on Macau remained rosy last month as government statistics recorded a 24% rise in March gambling revenue year-over-year. This jump is a whopping $600 million dollar increase over the same period last year. LVS is a BUY.
MSCI South Korea Index (EWY) rose 2.00% for the week. EWY bounced off of its 50-day moving average and was finally able to penetrate the $60 resistance level. This move has been a long time coming, and with an ascending 50-day moving average directly under the $60 level, I expect bullish days ahead for EWY. EWY is a BUY. Raise your stop to $54.50.
MSCI Malaysia Index (EWM) moved up 1.79% last week. EWM’s stock chart followed EWY’s lead and made a nearly identical move off of the 50-day moving average. Central bank governor Zeti Akhtar Aziz recently stated that domestic demand would continue to anchor growth, even as the European economic woes slow external demand. EWM is a BUY. Raise your stop to $13.25.
Market Vectors Russia ETF (RSX) dipped 0.95% last week. RSX fell below its 50-day moving average last week and, per our long-standing BUY/HOLD rules, changed to a HOLD.
iShares JPMorgan USD Emerg Markets Bond (EMB) was flat. EMB has pulled back over the past few weeks and is making a solid base directly above the 50-day moving average. That situation makes this juncture a good point to add to your position. Investors have poured $492 million into this category of funds in just the past month, with total net inflows hitting $1 billion for 2012. EMB is a BUY.
Market Vectors Indonesia Index ETF (IDX) showed some signs of life last week and jumped 4.07%. After many weeks of sideways consolidation, our waiting game finally paid off as IDX broke above the 50-day moving average on strength and moved higher. IDX is a BUY. Raise your stop to $27.50.
Listed Private Equity ETF (PSP) was flat for the week. PSP continued to trade sideways last week, remaining near the $9.50 price level. The 50-day moving average continued to move upwards, providing support once PSP breaks out of its consolidation phase. PSP is a BUY.
iShares Singapore ETF (EWS) was unchanged. EWS has been trading sideways along the formidable $13 resistance level for some time now. I expect this position to break out within the next week or two, if general conditions remain favorable. EWS is a BUY.
Berkshire Hathaway (BRK-B) dipped 0.27%. Although BRK-B did not do much this week, Warren Buffett did. Much like I did in Pittsburgh, Buffett began his career as a newspaper boy in Omaha. Only Buffett now owns his Omaha, Neb., hometown newspaper, while The Pittsburgh Press no longer exists. To commemorate his humble beginnings, Buffett attended the Omaha Press Club Show recently, dressed as a paperboy, and sang, “I’m Only a Paperboy,” to the tune of “It’s Only a Paper Moon." Apparently, Mr. Buffett maintains his sense of humor, as well as he does his balance sheet. BRK-B is a BUY.
iShares MSCI Hong Kong Index (EWH) fell 1.67% last week. EWH dipped below its 50-day moving average last week on unusually high volume. EWH averages roughly four million trades per session, but saw volume spike to a whopping 34 million shares on Thursday. EWH continued higher after Thursday’s shakeout. Trading events such as these normally signal an inflection point in a position’s outlook and I’ll be monitoring this position closely over the coming days. EWH is just three cents short of its 50-day moving average and is a HOLD.
Freeport McMoRan Copper & Gold Inc. (FCX) pulled back 0.44% over the past five trading days. Investors did not like recent news that Indonesia would be increasing taxes on Freeport’s mining operations. However, with Freeport’s business making up 1.6% of Indonesia’s total gross domestic product (GDP), it’s a safe bet that things will be smoothed out soon, as Indonesia and FCX only profit if they work together. FCX will pay you a $0.3125 dividend on April 11, and is scheduled to report earnings on April 18 before the markets open. FCX is a HOLD.
Visa Inc. (V) moved up 0.46%. Visa emerged unscathed last week in the wake of MasterCard’s recent cardholder data-loss debacle. Initial reports pegged the number of affected cardholders at 10 million. However, follow-up reports revised the figure to 50,000 and put the blame on a third-party card processor. Visa ended the week higher, as did competitor MasterCard. V is a BUY.
Ford Motor Co. (F) rose 2.60%. Ford recently reported a breakthrough technology for its standard (non-hybrid) Ford Fusion model. Ford will offer a new system, known as “Auto Start-Stop,” for only $295. This option seamlessly starts and stops the motor during idle times, such as traffic light stops, and boosts fuel efficiency by 3.5%. This kind of innovation is what is driving Ford rapidly back to profitability. F is scheduled to report earnings on April 24, prior to the market’s open. Ford is a BUY.
Yum! Brands, Inc. (YUM) came in flat for the past five trading days. YUM! will pay a $0.285 dividend on May 4 and is scheduled to report earnings on April 18, after the market closes. YUM! is a BUY. Raise your stop to $61.50.
Statoil ASA (STO) dipped 1.89% last week. Statoil boasts an extremely strong cash flow figure at $6.09 per share. This figure is more than four times the market mean. STO is a HOLD.
P.S. I’ve just launched my first new investment product in five years. It’s called Nicholas Vardy’s Dividend PRO. This trading service focuses on low-risk, high-dividend-paying stocks, but with a twist. Well, there actually are two twists. First, Dividend PRO employs a "secret," income-boosting strategy that’s proven effective more than 90% of the time. Second, Dividend PRO regularly features an options play related to a dividend-paying stock, allowing subscribers who don’t mind a little more risk the chance to pull down huge gains. If you’re interested in dividends and blockbuster option gains, click here for more information on Dividend PRO.

Exclusive  Fed Taper Plan May Be on Hold

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

previous article

The U.S. markets may be stuck in a trading range, but your Bull Market Alert picks continue to generate a spate of double- and triple-digit precentage gains.
Last week's recommendation, Novo Nordisk (NVO) soared 7.6% in the past two days on news that the Food and Drug Administration approved Novo Nordisk’s Levemir for pregnant women with diabetes. Novo Nordisk is now "the only company that offers a complete portfolio of insul


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

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

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

  • Cash Machine
  • Premium Income (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Profits Alert
  • Hi-Tech Trader

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

  • Successful Investing
  • Intelligence Report
  • Bullseye Stock Trader

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

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Technical Traders Alert
  • Success Trading Group

Used by financial advisors and individual investors all over the world, 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.

  • Dividend Investor