Global stock markets rallied on cue this past week, following a couple weeks of overly negative sentiment. The Dow Jones was up 2.17%, the S&P 500 rose 2.47% and the NASDAQ jumped 3.15%. Global markets joined the party, with the MCSI Emerging Markets Index up 1.87%.
Big gainers in your Alpha Investor Letter portfolio included India’s ICICI Bank Ltd. (IBN), which soared 7.94%; the Market Vectors Biotech ETF (BBH), which jumped 5.42%; Google Inc. (GOOGL), which gained 4.37%; and the First Trust US IPO Index (FPX), which added 3.57%.
Three positions hit new 52-week highs: Berkshire Hathaway Class B Shares (BRK-B), the First Trust US IPO Index (FPX), and ICICI Bank Ltd. (IBN).
No fewer than nine of your Alpha Investor Letter positions rose back above their 50-day moving averages and moved to a BUY. These include Google Inc. (GOOGL), Wisdom Tree Japan Hedged Equity (DXJ), First Trust US IPO Index (FPX), Guggenheim Spin-Off (CSD), WisdomTree Japan SmallCap Dividend (DFJ), Global X Guru Index ETF (GURU), PowerShares Buyback Achievers (PKW), Vanguard Russell 2000 Index ETF (VTWO) and ICICI Bank Ltd. (IBN).
With so many of your positions rising in the past two weeks, this is a good time to adjust your stops upward to lock in some gains.
With Berkshire Hathaway Class B Shares (BRK-B) up 77.52%, raise your stop to $122.00.
Do the same for the following positions: Google Inc. (GOOGL), raise your stop to $510.00; the Market Vectors Biotech ETF (BBH) goes to $88.00; The Blackstone Group (BX) rises to $27.50; and The First Trust US IPO Index (FPX) moves to $44.50.
With market sentiment still firmly in the “fear” range, I expect markets to continue to recover over the coming weeks.
I am encouraged by some technical breakouts to the upside — particularly in the technology and high-tech sector. That suggests risk appetite has not ebbed as much as many investors had feared.
The next challenge will be the market’s tone as we enter September, which has been traditionally a weak time of the year.
Portfolio Update
WisdomTree Japan Hedged Equity (DXJ) rose 2.10% last week. The Bank of Japan decided earlier this month to keep its economic stimulus monetary policy unchanged. Governor Haruhiko Kuroda also commented on continuing increases in job creation and income growth. DXJ moved above the 50-day moving average (MA) early last week to become a BUY.
Google Inc. (GOOGL) gained 4.37%. The media spotlight is shining on Google this week as the company celebrated 10 very successful years since its initial public offering (IPO). Google is up 1,373% since going public on August 19, 2004. GOOGL also returned to a BUY.
iShares S&P Global Timber & Forestry Index (WOOD) added 2.98% over the past five trading days. WOOD has been making a strong comeback over the past two weeks after correcting earlier this month. Looking at WOOD’s chart, the $49.00 price level stands as a historically strong support level, and WOOD’s recovery continues upwards from this price. Should momentum continue, WOOD will likely return to a “Buy” next week. WOOD is a HOLD at present.
Market Vectors Biotech ETF (BBH) jumped 5.42%. BBH accelerated its pace over the past two weeks, joining the wide-ranging rally amongst many other sectors. BBH is now up 30% in the Alpha Investor Letter portfolio and remains a strong BUY.
The Blackstone Group (BX) dipped 0.66% last week. Blackstone Energy Partners signed an agreement to acquire 107,000 acres of the Haynesville natural gas shale basin in Louisiana. The transaction should be complete by the end of the year. This acquisition gives Blackstone an even larger stake in the fast-growing U.S. energy sector. BX is a HOLD.
Vanguard Russell 2000 Index ETF (VTWO) gained 2.58% over the past five trading days, as small caps typically tend to follow the broader market trends. However, this exchange-traded fund (ETF) will traditionally make larger, quicker gains than funds that track the less volatile Dow Jones or S&P 500 indexes. VTWO changed to a BUY.
ICICI Bank Ltd. (IBN) jumped 7.94% last week to hit a new 52-week high. IBN recently announced a unique offering with Samsung that allows the bank’s debit card cardholders to purchase Samsung mobile devices and make monthly re-payments that include a nominal interest rate charge. Although this approach is typically a revenue generator for credit cards, IBN sees a potential group of 22 million cardholders as possible users of the offering. IBN’s aggressive move higher last week pushed it above the 50-day MA and to a BUY.
PowerShares Dynamic Energy Exploration & Production ETF (PXE) rose 2.35%. PXE appears to be making a stand at the 200-day MA in the face of falling global energy prices. PXE even managed a solid gain last week. Oil is now at a seven-month low and under $95 per barrel. PXE is a HOLD.
KraneShares CSI China Internet ETF (KWEB) gained 0.95% during its first week in the Alpha Investor Letter portfolio. This bet on the China Internet sector has been a steady gainer for several months, following a broader trend among China stocks. Just 5% away from its 52-week high, last attained in early March, KWEB appears on track to push substantially higher. KWEB is a BUY.
