Last week was mixed for U.S. stock markets, with the Dow Jones up 0.28%, the S&P 500 flattish — rising only 0.06% — and the NASDAQ down 0.34%. The MCSI Emerging Markets Index eked out a 0.32% gain.
Big gainers in your Bull Market Alert portfolio included Silicon Motion Technology (SIMO), which gained 1.94%, and Halyard Health Inc. (HYH), which added 1.66%.
You hit your tightened stops on both Regeneron (REGN) and Ambarella Inc. (AMBA). You booked a 10% gain in Regeneron. Your remaining REGN August $480 calls sold at $62.18 for a 63.63% gain. Total return on REGN options was a 71.29% gain.
You booked a huge 40.02% gain in your Ambarella (AMBA) stock, which moved up so quickly, I didn’t even have a chance to recommend options on the position.
Your position in the iShares MSCI Hong Kong (EWH) fell below its 50-day moving average and now is a HOLD.
With your Market Vectors Biotech ETF (BBH) June $132 call options (BBH150619C00132000) expiring this Friday, I am recommending that you cut your losses on this play.
This week’s Bull Market Alert recommendation — Qualys Inc. (QLYS) — takes you into the red-hot area of cybersecurity.
Silicon Valley-based Qualys provides cloud security that enables organizations to identify security risks to their IT infrastructure quickly.
Here’s why I expect the QLYS stock to continue upward in the coming months.
First, QLYS is in a hot sector. While the broader U.S. market is having trouble gaining traction in 2015, the cybersecurity space — as measured by the ISE Cyber Security Index — is up by more than 21% this year.
Second, QLYS is a company on the move. Last week, Qualys and ForeScout Technologies, which provides continuous monitoring, announced a partnership that will integrate their security appliances to give joint customers real-time assessment and mitigation capabilities.
Third, the recent pullback in the company’s stock price offers a terrific opportunity to enter the stock. On June 5, the company reported worse-than-expected quarterly results and the stock fell 33% for the day.
That sell-off was overdone. The proof? Insiders are buying the stock on any bout of weakness. A QLYS director recently bought 50,000 shares, or about $1.87 million worth of stock, at just over $37.00 per share.
I recommend you do the same. So buy Qualys (QLYS) at market today and place your stop at $34.00. Wunderlich Securities just initiated coverage of Qualys with a buy rating and a $50 price target. That’s almost 20% above Friday’s closing price.
If you want to play the options, I recommend the September $45.00 calls (QLYS150918C00045000), which last traded at $3.00 and expire Sept. 18.
Halyard Health Inc. (HYH) added 1.66%. This position continued to trade sideways for another week of consolidation. Remaining very oversold, HYH is still poised to move higher. Short interest in HYH also took a 7% drop recently, suggesting that the traders betting on lower prices are starting to throw in the towel. HYH is a HOLD.
ProShares Ultra Nasdaq Biotechnology ETF (BIB) dipped 1.73%. BIB remains at its elevated price levels as it traded sideways yet another week along the 3x-tested $90 resistance level. This also represents a point very close to its late March 52-week high near $95. BIB is above its 50-day moving average (MA) and remains a BUY.
iShares MSCI Hong Kong (EWH) gave back 1.18%. EWH is a non-leveraged fund that gives you exposure to the Hong Kong market, thereby giving you indirect exposure to the movement of the closely linked Chinese market. Its major exposure falls under Financials with a 65% allocation. EWH also has 10-12% allocations to Industrials, Utilities and Consumer Discretionary holdings. EWH fell below the 50-day MA to become a HOLD.
WisdomTree Europe Hedged Equity Fund (HEDJ) closed the week flat. Although the relentless rise of the U.S. dollar has done wonders for the buying power of vacationing Americans during their European vacations, it’s had the opposite effect on some of their European investments. HEDJ hedges that risk. HEDJ is a HOLD.
Silicon Motion Technology (SIMO) gained 1.94%. In addition to the positive earnings catalysts I highlighted in my recent SIMO recommendation, this play on the high tech sector currently pays a 1.70% dividend on a quarterly basis. SIMO also enjoys a low, declining short interest in its shares outstanding as it recently marked a month-over-month dip from 1.42 million shares sold short to 1.38 million shares. SIMO is a BUY.
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