U.S. Markets Trade Sideways as Emerging Markets Recover

Nicholas Vardy

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

It was a mixed and quiet week for U.S. stock markets during the past week. The S&P 500 was down 0.19%, while the NASDAQ rose 0.51%. The MSCI Emerging Markets Index showed more strength and was up 2.59%.

Big gainers in your Alpha Investor Letter portfolio included iShares MSCI Ireland Capped Investable Market Index (EIRL), up 1.75%, and the Guggenheim Spin-Off (CSD), rising 1.40%.

The iShares MSCI Singapore Small Cap Fund (EWSS) and WisdomTree Japan Hedged Equity (DXJ) rose back above their 50-day moving averages, and each is now back to a BUY.

On the flipside, Visa (V) and Google (GOOG) dropped below their 50-day moving averages and each is now a HOLD.

Overall, most of your positions traded flat this week, as the summer doldrums set in.

The U.S. market remains slightly overbought and is having trouble breaking (and staying) above the 1,700 level on the S&P 500. Your specialist U.S. exchange-traded funds (ETFs) — Guggenheim Spin-Off (CSD), PowerShares Buyback Achievers (PKW) and First Trust US IPO Index (FPX) — continue to outperform the broader market.

Emerging markets continue to bounce back after a massive underperformance so far in 2013. You may notch some big gains in this area before the end of the year.

On a personal note, I am out the door taking a flight from London to San Francisco this morning for the Money Show to do presentations on Thursday and Friday. You can see my schedule by clicking here. You can also sign up to watch two of my presentations live via webcast.

I am scheduled to land at 2:00 p.m. and will be at the CNBC studios in time for a 6:00 p.m. Pacific time appearance on CNBC Asia. I’ll be discussing prospects for the BRIC countries — Brazil, Russia, India and China — focusing on India, which celebrates its 66th day of independence on Aug. 15.

Portfolio Update

Berkshire Hathaway (BRK-B) dipped 0.53% last week. When your business is as big as Warren Buffett’s, you need to make big acquisitions to “move the needle.” However, Mr. Buffett has managed to make several “smaller” successful purchases recently — smaller meaning “only a few billion dollars.” This is probably best stated by Warren himself, when in 2001, he said, “We need ‘elephants’ to make significant gains now — and they are hard to find.” Happy hunting, Sir Buffett. BRK-B is a BUY.

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Visa Inc. (V) gave back 2.00% over the past five trading days. The recent Global Travel Intentions Study 2013, funded by Visa, found that travelers were planning to boost their travel spending by a whopping 40% on international travel in the near future. The good news for Visa — many of them will likely be using their Visa cards to pay for much of this. V is a HOLD.

iShares MSCI Ireland Capped Investable Market Index (EIRL) added 1.75% and hit a new 52-week high last week. Investors have been buying EIRL for the past eight weeks, keeping EIRL firmly on an uptrend, as the positive news just keeps coming out of Ireland. The Central Bank of Ireland reported Friday that Irish bank reliance on European Central Bank (ECB) funding fell a full 5.4% in July alone. EIRL is a BUY.

iShares MSCI Singapore Small Cap Fund (EWSS) added 0.55%. EWSS continued its sideways trading pattern, showing that the bulls and bears continue in their struggle for the upper hand. However, the bulls may have finally “seen the matador’s red cape” last week as EWSS pushed up through the 50-day moving average on a pop of strength. EWSS is now a BUY.

Google Inc. (GOOG) dipped 1.71% last week. The Internet has been abuzz lately on the heels of Google’s wildly successful launch of its Chromecast media-streaming device. Although a milestone, this device leads to a much bigger, more lucrative prize — Internet TV. At present, most premium television content enters living rooms via satellite or traditional cable TV service. Internet TV could be the next revolution in content delivery, allowing greater competition over the ubiquitous broadband pipeline. Google’s current inroads leave it very well positioned to thrive in this budding new market. And, for Google, a company that specializes in advertisement delivery, owning a piece of the living room TV is nothing short of a “new market share jackpot.” GOOG is a HOLD.

WisdomTree Japan Hedged Equity (DXJ) ended the week flat but managed to rise above its 50-day moving average and regain its “Buy” recommendation. DXJ is very near a second bounce from the $45.00 level — completing its run at the $47.50 price level. A break above this price is likely a signal of higher prices ahead. DXJ is now a BUY.

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Guggenheim Spin-Off (CSD) rose 1.40% last week and hit a new 52-week high. CSD allows you to profit from a basket of new corporate spin-offs, rather than having to take chances on individual, newly spun-off companies. Although some of these new companies may be “dogs,” history shows more winners than losers — and this winning approach reflects quite accurately in CSD’s price history. CSD is a BUY.

PowerShares Buyback Achievers (PKW) traded flat once again last week. As the largest of the “buyback” exchange-traded funds, PKW also has one of the top year-to-date returns — logging an excellent 30% gain since the beginning of 2013. PKW is a BUY.

First Trust US IPO Index (FPX) also traded flat. After nearly six weeks of gains and new 52-week highs, FPX took a breather last week and moved sideways. Consolidation trading, or “trading sideways,” is a natural part of any stock’s price movement and, in many cases, signals that a stock is building a strong foundation from which to continue an upwards trajectory. FPX is a BUY.

WisdomTree Japan SmallCap Dividend (DFJ) also made the list of positions that traded flat last week. DFJ’s recent dip, and immediate bounce-back, is a good sign that investors remain bullish on the Japanese recovery. DFJ is a BUY.

Vanguard Global ex-US Real Estate ETF (VNQI) closed the week almost perfectly flat, losing just 0.02%. VNQI shows that the rally in both developing and emerging market real estate has shifted into neutral, along with the U.S. real estate market. With interest rates continuing to maintain historical lows, expect another upwards move before the Fed manages to push interest rates even higher. VNQI is a BUY.

iShares S&P Global Timber & Forestry Idx (WOOD), in lockstep with the continuing theme in many market sectors last week, dipped just 0.08%. Although demand for timber is obviously influenced greatly by the housing market, lumber is used in a great many other applications as well. As a staple building block across a vast number of uses, demand for wood will never cease. WOOD remains a BUY.

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PowerShares Global Listed Private Eq (PSP) closed the week as the winner of the sideways trading contest, logging a perfect 0.00% move for the week. PSP has formed a classic “V” pattern on its chart over the past few months, bottoming at the 200-day moving average, and running nearly back to its $12.00 resistance level. PSP presented this same pattern in November 2012, and proceeded to run from $9.25 up to $12.00 for a gain of nearly 30%. PSP could be poised for a repeat performance, given the historically favorable tailwinds of the fourth quarter. PSP is a BUY.

Market Vectors Biotech ETF (BBH) dipped 1.36% last week. This pullback coincides with my recommendation from last week to create the perfect buying opportunity. BBH is preparing for its next upwards move past the recent $80.67 high attained just over one week ago. BBH is a BUY.

Latest Special Reports

As a courtesy, I want to bring to your attention my latest special report, Rally Ringer Stocks: 3 Plays Leading the Dow to 18,000. This FREE reports gives excellent investment information on a key segment of the market.

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. These special reports and others are accessible FREE on my website.

P.S. Join me this week for the San Francisco Money Show, Aug. 15-17, at the San Francisco Marriott Marquis. There is no charge for this conference and you still can sign up as a walk-up attendee. Just stop by the Money Show’s registration desk at the Marriott Marquis Hotel in the North Yerba Buena Foyer and mention code #031736. I look forward to seeing many of you there this Thursday and Friday. This is the first time I’m returning to the Bay Area in four years. I’ve got a busy schedule with four presentations at the Money Show itself, as well as an appearance on CNBC Asia.

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