Pausing for Breath after Booking Some Well-Timed Gains Last Week

Nicholas Vardy

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

Wall Street finally broke its four-week winning streak, with the S&P 500 dropping 1.07% and the MCSI Emerging Markets Index tumbling 2.66%. Worries surrounding Fed tapering; a “Black Swan” style collapse in the Japanese stock market last Thursday; and weak manufacturing data from China all combined to unnerve investors. Another 3% dive in Japan’s Nikkei on Monday, combined with a rebound of 1.41% overnight to start the trading week, will continue to keep investors on edge this week.

Your Bull Market Alert portfolio weathered the market turmoil well, the market sell-off notwithstanding.

With Japan tumbling a breathtaking 7.2% last Thursday, you were stopped out of ProShares Ultra MSCI Japan (EZJ) for a gain of 14.31% on your remaining half of the position. You recorded a 16.16% gain on this position as a whole.

In a well-timed Special Alert last Tuesday, I recommended that you sell half of your $50 call options in WisdomTree Japan Hedged Equity (DXJ) to lock in 66.67% gains in just seven trading days.

At that time, you also sold half of your September $85 calls in Stratasys Inc. (SSYS) to lock in 51.01% gains.

Finally, last week’s Bull Market Alert recommendations — a pair of Irish options bets — Jazz Pharmaceuticals (JAZZ) and Bank of Ireland (IRE) soared 30% and 33.33%, respectively.

Given that JAZZ rocketed 9.24% and IRE jumped 4.71% last week, you would normally expect the options to soar even more. But this just shows you the impact of wide “bid-ask” spreads in both of these options, which range between 20% and 27%.

Finally, Melco Crown Entertainment Limited (MPEL) fell 3.37% last week, slipping below its 50-day moving average, and it has now moved to a HOLD.

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I’ll be back with a new Bull Market Alert recommendation next week.

Portfolio Update

Bank of Ireland (IRE) jumped 4.71% last week, as it continued with its second test of the $10.00 resistance level over the past three weeks. IRE appears well-positioned to move above $10.00, supported by its 20-day moving average. Despite being one of the hardest hit regions during the European debt crisis, the Irish economy is expected to grow 1.1% in 2013 — the third-fastest gross domestic product (GDP) growth rate in Europe. IRE is above the 50-day moving average and is a BUY.

Melco Crown Entertainment Limited (MPEL) fell 3.37% last week. As the cleanest gambling play on Macau, MPEL stands as the clear long-term winner on growth when compared to its largest rivals — Las Vegas Sands (LVS), Wynn Resorts (WYNN) and MGM Resorts International (MGM). MPEL’s three-year return is 311%, compared to its competitors’ three-year returns of 206%, 113% and 6.45%, respectively. MPEL dipped below its 50-day moving average and is now a HOLD.

Delphi Automotive (DLPH) dipped 0.97%, giving back just a bit of its previous week’s 7% gain. DLPH’s main competitors are Denso Corp. and Magna International, and DLPH is best-in-class when profit margins are compared. DLPH currently reports a 17% gross margin and 10% operating margin, compared to Denso’s 16% and 7%, and Magna’s 12% and 5% margins. DLPH is a BUY. Raise your stop to $46.40.

Stratasys Ltd. (SSYS) lost 3.31%. SSYS’s recent dip relating to last week’s “3D-printed gun” controversy is likely a news-driven buying opportunity, as there has been no material change in the company’s outlook. Analysts’ estimates still forecast a 38% earnings per share gain next quarter. If nothing else, the hullabaloo over the gun controversy demonstrates the true “disruptive” power of 3D-printing technology and the impact that this technology will have on the industrial landscape in the near future. SSYS is a BUY.

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Jazz Pharmaceuticals (JAZZ) rocketed 9.24% last week. Pharmaceutical stocks rallied across the board last week, and JAZZ was no exception. JAZZ gained steam after breaking above the thrice-tested and long-term $60.00 resistance level, making new 52-week highs all week. Look for a special alert in the following days, should JAZZ continue its moon shot. JAZZ is a BUY. Raise your stop to $58.50.

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As a courtesy, I want to bring to your attention my latest special report, Hedge Fund Secrets Revealed: A Simple Four-Step Technique to Manage Your Money like a Hedge Fund. This FREE report gives you the four-step process to maximize your profits just like the best investment pros do.

In addition, take a look at the latest version of The Top 12 Stocks You Should Buy Right Now, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. Both of these special reports are accessible FREE on my website.

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