Last week was mixed for global stock markets. The Dow Jones was down 0.12%, while the S&P 500 eked out a 0.31% gain. With stocks popping higher Friday, both the Nasdaq and S&P 500 extended their winning streaks to six weeks. The MCSI Emerging Markets Index ended the week 1.47% lower.
There wasn’t much movement in your Bull Market Alert portfolio, although you were stopped out of your position in Banco Santander, S.A. (SAN) at a loss.
Overall, I am concerned that the current market rally is running out of steam. Volume in Friday’s trading fell across the board. Market breadth is weak. Insiders have been selling stock at a higher rate than normal.
So, here are my recommendations concerning your existing positions in your Bull Market Alert portfolio.
First, sell half of your options in Fomento Economico Mexicano SAB (FMX) to lock in your 56% gains.
Second, raise your stop in PowerShares Listed Private Equity (PSP) to $10.75. If you do hit this stop, you will have locked in an 11% gain on this position.
Third, raise your stop in Plum Creek Timber Co. Inc. (PCL) to $47.00. Although I am a big believer in timber as a big picture investment theme, a number of insiders are selling this stock.
Finally, I am recommending that you get back into Banco Santander, S.A. (SAN). Note that the stock is already trading back above its previous stop price. I still believe that European banks may become the investment story of 2013. For a review of the investment case for Santander itself, you can read the relevant issue of Bull Market Alert by clicking here.
So, buy Banco Santander, S.A. (SAN) at market today and place your stop at $6.80. If you want to play the options, I again recommend the June $8.00 call options (SAN130622C00008000).
Bull Market Alert‘s slogan is that “there is always a bull market somewhere.” So, it’s only fitting that I draw your attention to the top-performing global market of 2013, the Market Vectors Vietnam ETF (VNM), up 27.56% year to date.
So, why are investors so hot on Vietnam?
After several unsuccessful attempts, the Vietnam government has gotten inflation under control. State-owned enterprises are being privatized. Technology production is gradually shifting from China to Vietnam. In fact, “Apple killer” and South Korean giant Samsung has moved 40% of its mobile phone production to Vietnam. Manufacturing costs are a lot lower than in China, and Vietnam’s population is much younger, with an average age of 28.
With VNM still only trading at a price-to-earnings (P/E) ratio of around 10, I expect that there still is lots of upside in this market. That said, be prepared for a volatile ride.
So, buy Market Vectors Vietnam (VNM) at market today and place your initial stop at $19.50.
Portfolio Update
Bank of Ireland (IRE) dipped 2.29% over the past five trading days. Overall, European banks have borrowed only one quarter of the total rescue funds allocated by the European Union. In an even greater show of recovery, banks have already paid back one quarter of the total amount loaned out. The European banking revival remains firmly on the path to redemption. IRE is a BUY.
National Bank of Greece SA (NBG) fell 3.75% last week. Greece is continuing its participation in the European recovery, as well. Greek officials recently released an updated fiscal plan for 2013–2016, showing a dip in the government’s projected 2013 budget deficit of 5.5% of gross domestic product (GDP) to just 4.3% of GDP. Projected deficits continue to decrease through the 2014–2016 years at rates of 2.8%, 3.7% and 2.3% of GDP, respectively. NBG is a HOLD.
PowerShares Listed Private Equity (PSP) remained flat last week as it battled the $11 price level. Traders reached for the $11 level three times last week, managing to hit it on Thursday. PSP appears poised to continue higher as the 20-day moving average is rising from below and remains at a level PSP has not broken below since late November 2012. PSP is a BUY.
Qihoo 360 Technology (QIHU) gained 1.51%. QIHU competitor BIDU reported earnings last week. Although investors showed some concern over BIDU’s future growth prospects, (largely due to competition from QIHU), BIDU generated a 36% increase in net profits on double-digit percentage revenue growth. BIDU’s worries are to QIHU’s advantage. QIHU is scheduled to report earnings on Feb. 21. QIHU is a BUY.
Plum Creek Timber Co. Inc. (PCL) rose 0.51% over the trading week. PCL recently announced that its executive vice president and chief operating officer Tom Lindquist has been named president of the company. PCL will also pay a $0.42 per share dividend on March 1 to shareholders of record as of Feb. 15. PCL is a BUY.
Fomento Economico Mexicano SAB (FMX) gave back its prior week’s gains, dipping 1.71%. Ford Equity Research and Jaywalk Consensus both have a ‘Buy’ rating on FMX, and MarketEdge has a ‘Long’ on the stock (its highest rating). FMX will report earnings on Feb. 27, before the market’s open. FMX is a BUY.
