Bull Takes a Breather

Nicholas Vardy

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

The major U.S. indexes ended down for the week, as the S&P 500 extended its losing streak to five straight weeks.

Overall, it was a tough May. The S&P 500 fell as much as 4% from its 52-week high before bouncing back during the last week to pare the month’s loss to 1.1%. The average domestic equity fund shed 1.3%, holding up better than world stock funds’ average 2.4% decline.
Market sentiment has turned distinctly negative. The reasons are many. Data are pointing toward an easing of the U.S. economic recovery. The U.S. Federal Reserve Bank’s $600 billion bond-buying effort to spur spending and growth ends this month. Housing prices are still falling. Figures on jobs and manufacturing are disappointing and the headline-grabbing U.S. unemployment rate rose to 9.1%. China has applied the brakes to its economy to rein in inflation.
Your Bull Market Alert portfolio had a mixed week, with winners and losers evenly split. Most of your positions remain HOLDs, as they are trading below their 50-day moving averages.
Here are a couple of highlights from your Bull Market Alert portfolio. Millicom International (MICC) delisted from Nasdaq last week and is now trading in the pink sheets as more and more foreign companies are delisting to cut costs and red tape, and avoid compliance with Sarbanes-Oxley rules. Although foreign companies like Axa and Deutsche Telekom have maintained about three-fourths of their old NYSE trading volume, our general policy at Bull Market Alert is not to recommend unlisted stocks. Therefore, I am recommending that you SELL Millicom at this time to lock in your gains.
You’ll see that National Bank of Greece SA (NBG) soared 16.65% this past week on news of a new Greek bailout. That’s to be expected with a stock that is highly driven by news. Once again, you should think of this position like an option — except one that does not expire. The volatility will be stomach churning. But, I believe, it ultimately will be worth it.
Otherwise, I am holding off on any specific recommendations this week. A sideways, choppy market is extremely difficult to play successfully. Both bears and bulls will have trouble because of the lack of a sustained market direction. Until that changes, it is best to pull in your investment horns.
Portfolio Update
Alexion Pharmaceuticals (ALXN) ended the week 2.53% higher. Alexion announced Wednesday that regulators will conduct a faster review of its drug Soliris as a treatment for a rare genetic disease that causes blood clots throughout the body. With the stock still trading below its 50-day moving average, ALXN remains a HOLD.
Alliance Resource Partners L.P. (ARLP) dropped 4.33% this past week. For now, though, trading below its 50-day moving average, ARLP is a HOLD.
UltraShort Euro ProShares (EUO) pulled back 4.95%. As a hedge on your European banking positions, this will generally move opposite to big moves in NBG or IRE. EUO is now a HOLD.
Bank of Ireland (IRE) ended the week 8.88% lower. The bank announced it would issue up to 2.2 billion euros ($3.2 billion) in new stock as part of an offer to buy back debt at a steep discount using both cash and equity. Trading below its 50-day moving average, IRE remains a HOLD.
Millicom International (MICC) delisted from Nasdaq last week. As our general policy at Bull Market Alert is not to recommend unlisted stocks, I am recommending that you SELL your position here.
Nabors Industries (NBR) was flat this week. I am still looking to time our exit on this, as it bounces back toward the $30 level. Until then, NBR is a HOLD.
National Bank of Greece SA (NBG) soared 16.65% this past week. According to mySmartrend.com, National Bank of Greece (NBG) has a potential upside of 495.2%, based on an average consensus analyst price target of $8.03. That’s why this pick is more like an option than a stock. NBG remains a HOLD.
Novo Nordisk A/S (NVO) rose 1.65% this past week. This is a solid company with terrific fundamentals. Now trading above its 50-day moving average, NVO is back to a BUY.
Rayonier Inc. (RYN) rose 1.37% this past week. Raymond James just initiated coverage of Rayonier with an “outperform” recommendation. RYN remains a BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) traded flat this past week. Trading just below its 50-day moving average, this bet on agricultural food prices remains a HOLD.
Sohu.com (SOHU) dropped 3.04%, and continues to suffer from negative sentiment. It now is trading perilously close to its stop price and remains a HOLD.
Silvercorp Metals (SVM) got off to a weak start, as silver continued to pull back. Despite the strong fundamental case for silver, this is a highly risky — and volatile — play. I’m moving this to a HOLD.
Toyota Motor Corp. (TM) dropped 2.13% this past week. The company reiterated that the disrupted domestic production lines will reach about 90% of normal volume at the end of June, which is higher than the previous 70% projected last month. Trading above its 50-day moving average, Toyota is a BUY.

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