It looks like this year’s Santa Claus rally has kicked in, right on time as the Dow Jones rose 2.97% and the S&P 500 was up 2.42% over the past five days.
But much like the rest of the world, Santa Claus seems to ignoring emerging markets, as the MCSI Emerging Markets Index tumbled 1.15%.
Big gainers in your Bull Market Alert portfolio included Trina Solar Limited (TSL), which jumped 11.98%; the ProShares Ultra Russell2000 (UWM), which added 6.58%; Stratasys (SSYS), which gained 4.90%; and Google Inc. (GOOG), which gained 3.75%.
Last week’s Bull Market Alert option bets paid off quickly, with your Google Inc. (GOOG) $1,080 February 2014 call options soaring 31.27% and your ProShares Ultra Russell2000 (UWM) April 2014 $78 calls jumping 27.94%.
Sell half of your options in both of these positions today to lock in these solid, short-term “stocking-stuffer” gains. But hold on to the stock and exchange-traded fund (ETF), as well as your remaining options for potentially bigger gains in the days ahead. Also, raise your stop in Google Inc. (GOOG) to $1,043 to lock in at least a 20% gain in the stock.
As this is the final issue of Bull Market Alert for 2013, I want to leave you with my take on the remaining crucial days of the trading year.
So far, December is looking like a textbook month. The U.S. stock market is usually flat or down the first two weeks of December. It then picks up in the second half of the month into the new year. As the chart below from sentimentrader.com confirms, the bulk of December’s gains take place over the final ten trading days of the year.
The Stock Trader’s Almanac actually has a narrower definition, which indicates that the Santa Claus Rally rally takes place “within the last five days of the year and first two in January.”
According to that definition, the Santa Claus rally starts today — Dec. 23 — although last week’s strong market performance suggests that it may have already started.
The bottom line?
I expect your current Bull Market Alert positions to continue to rally into Jan. 3. By the time you receive your next issue of Bull Market Alert on Jan. 6, I expect to lighten up on some of your current Bull Market Alert positions and book what I expect to be some solid gains.
Until then, I wish you Happy Holidays and a Prosperous New Year in 2014!
Portfolio Update
Bank of Ireland (IRE) dipped 0.62% last week. Bank of Ireland’s 50-day moving average (MA) finally caught up to its price level last week. This is a positive sign going forward and likely marks the next leg higher. Fitch Ratings believes that IRE may increase its loan impairment charges in early 2014 in an effort to clean up balance sheets. This would ultimately place IRE in a stronger position to undergo scheduled Asset Quality Reviews and stress testing in 2014 — ultimately strengthening IRE’s recovery. Up 122.15% in 2013, IRE is a BUY.
Google Inc. (GOOG) gained 3.75% and hit a new 52-week high. Google has been firing on all cylinders since its mid-October earnings report — rising steadily week after week. John Chen, the CEO of Blackberry, hinted late last week that he would like to see more of a “Blackberry experience” on Android. Although light on any concrete details, this effort could ultimately see Google realizing many more users through a Blackberry offering. With over 40 million installed users on the recently released Android version of the “BBM” app (Blackberry Messenger), the impact on Android users on Google could be very significant. Up 26.68%, GOOG is a BUY.
AutoNation (AN) ended the week flat. AutoNation is a popular stock among some of the biggest hedge fund names in the business. Edward Lambert’s ESL Investments holds 31.5 million shares, Murray Stahl’s Horizon Asset Management has 6.1 million shares and Oz Management and Scout Capital Management hold 3.3 million and 2.2 million shares, respectively. AN is a BUY.
iShares MSCI Spain Capped Index (EWP) gained 2.38% over the past five trading days. Germany was certainly one of the bright spots during the euro-zone crisis. In fact, the iShares MSCI Germany (EWG) fund is up 25.93% for 2013. However, for all of Spain’s economic woes during the crisis, EWP has managed to beat Germany by gaining 26.71% year-to-date. EWP is just pennies under the 50-day MA and is a HOLD.
Trina Solar Limited (TSL) jumped 11.98% last week, erasing its entire recent pullback. TSL announced it would be the sole supplier of solar modules to a large 75-megawatt solar energy project based in Thailand. Shipments to the Bangchak Solar Energy project will begin in late December. Thailand is emerging as a potentially large solar market in South East Asia, and this type of penetration will be very beneficial to TSL’s future. TSL remains a HOLD.
Stratasys (SSYS) gained 4.90% last week, ending three weeks of sideways trading. Stratasys is still realizing benefits from its recent MakerBot acquisition. MakerBot recently released a new concept in its retail stores — a 3D Photo Booth. Much like a traditional photo booth, the 3D photo booth allows folks to enter, scan any object (including themselves), and leave with a 3D printer file of their scanned item. So, what do you do with this file? Buy a 3D printer of course, and replicate their object — ultimately adding to SSYS’ sales figures and market share. SSYS is a BUY.
db X-trackers Harvest China ETF (ASHR) lost 4.49%. The Chinese central bank added $50 billion to their interbank market over the last three days, boosting confidence in market cash supplies and calming banking system fears. ASHR is a BUY.
ProShares Ultra Russell2000 (UWM) added 6.58%. UWM rose briskly from the 50-day MA last week, making this the 11th move upwards from this support line in 2013. Of course, UWM did have a little help from Federal Reserve Chairman Ben Bernanke. In contrast to the “taper tantrum” in May, markets responded positively to the actual introduction of tapering in Federal Reserve bond buying. Bernanke’s speech last Wednesday also marked the final address of his tenure, and the market’s positive response could help secure his legacy as head of the Fed. His successor, Janet Yellen, will have plenty of rough waters to navigate as the Fed pares back its economic stimulus over the coming months and years. UWM is a BUY.
Apple Inc. (AAPL) dipped 0.98%. Your Apple purchase was well-timed as news broke yesterday regarding the successful deal between Apple and Chinese mobile phone giant China Mobile. China Mobile will begin selling iPhones in January, giving Apple access to the largest mobile market on the planet. The introduction of the iPhone to China has been a long time in the making, and sales could be stellar for several quarters to come as Chinese folks across the land clamor to get their slice of Apple’s offerings. AAPL is a BUY.
Latest Special Report
As a courtesy, I want to bring to your attention my latest special report, the newly updated 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.
