The New Year got off to a slow start, with the Dow Jones down 0.28% and the S&P 500 pulling back 0.57%. Global markets continued to confound my expectations with MCSI Emerging Markets Index tumbling 4.51%.
Big gainers in your Alpha Investor Letter portfolio included Icahn Enterprises, L.P. (IEP), which recovered 6.60%, and Google Inc. (GOOG), which added 1.62%. All of your current positions remain “buys” with the exception of Vanguard Global ex-US Real Estate ETF (VNQI) and Icahn Enterprises, L.P. (IEP), which are trading below their 50-day moving averages.
Ten of your current Alpha Investor Letter positions are showing double-digit percentage gains — including 129.71% in Visa (V). And last month’s recommendation, The Blackstone Group (BX), is up 9.14% in just three weeks.
If you subscribe to my trading services, Bull Market Alert and Triple Digit Trader, you know that I recently recommended that you reduce your exposure to the market.
This is largely due to what I see as excessively bullish sentiment at the start of 2014.
I outlined my views on this in yesterday’s edition of The Global Guru.
As the Alpha Investor Letter is a longer-term investment service, the best way to address the current market froth is to lock in some of your current gains in your positions by raising your stops.
Here are my specific recommendations on that front.
- Raise your stop in Berkshire Hathaway (BRK-B) to $105.00.
- Raise your stop in Visa (V) to $200.00.
- Raise your stop in Wisdom Tree Japan Hedged Equity (DXJ) to $44.00.
- Raise your stop in Guggenheim Spin-Off (CSD) to $40.00.
- Raise your stop in PowerShares Buyback Achievers (PKW) to $40.00.
- Raise your stop in First Trust US IPO Index (FPX) to $41.00.
- Raise your stop in Market Vectors Biotech ETF (BBH) to $80.00.
- Raise your stop in The Blackstone Group (BX) to $25.00.
Portfolio Update
Berkshire Hathaway (BRK-B) lost 2.00% last week. A listing of the top S&P 500 stocks by short interest yields two companies sharing the top spot. One of the companies is Berkshire Hathaway, with a perfect 0% short interest. Don’t bet against the Oracle of Omaha, folks. History shows it’s a fool’s wager. BRK-B is above its 50-day moving average (MA) and is a BUY.
Visa Inc. (V) took a breather over the past four trading days, dipping 0.53%. V currently shows a very low Price/Earnings-to-Growth (PEG) Ratio of just 1.33. This implies an undervalued condition for Visa at its current price, based upon its earnings performance, signaling that Visa can move higher. Visa will announce earnings on Jan. 30, before markets open. V is a BUY.
iShares MSCI Ireland Capped Investable Market Index (EIRL) rose 0.86% to end yesterday at a new 52-week high. Ireland held its first bond auction since being free of bailout related regulations, and sales were much better than expected. Ireland offered three billion euros worth of bonds but saw demand spike to nine billion euros. Expect the good news to continue for this position well into 2014. EIRL is a BUY.
Google Inc. (GOOG) added 1.62% for the week and hit a new 52-week high yesterday, after analysts mentioned that Google’s next stop could be $1,300. Deutsche Bank also put GOOG on its own “must own” list, keeping the stock as a “Buy” and targeted for $1,220. And, even CNBC’s Jim Cramer said on-air that he was a buyer. With Google news commentary heating up and the Consumer Electronics Show (CES) in full swing in Las Vegas, expect Google to run higher, at least through to its earnings announcement. GOOG will report earnings on Jan. 30, after markets close. GOOG is a BUY.
WisdomTree Japan Hedged Equity (DXJ) lost 1.93% over the holiday-shortened trading week. The Nikkei index broke its 2014 two-day losing streak yesterday as the yen weakened to push the export sector higher. DXJ is a BUY.
Guggenheim Spin-Off (CSD) dipped 1.07%. CSD continues to hug the 50-day moving average (MA) and rise slowly higher. A trading pattern such as this has a high probability of breaking bullish, especially based on CSD’s previous history. CSD is a BUY.
PowerShares Buyback Achievers (PKW) dipped 0.72% last week. S&P 500 companies bought back an estimated $138 billion worth of stock in the fourth quarter of 2013. This represents the largest amount since 2007 and a 40% jump from the same quarter just one year ago. PKW is a BUY.
First Trust US IPO Index (FPX) ended the week flat. According to the Fourth Annual IPO Survey of U.S. Transaction Attorneys, 2014 holds a record-breaking outlook for initial public offerings (IPOs). Of the 50 attorneys surveyed, 50% felt IPO momentum would remain the same, and the other 50% felt IPO business would increase in 2014. This is good news for FPX going into 2014. FPX is a BUY.
WisdomTree Japan SmallCap Dividend (DFJ) closed the week nearly perfectly flat, dipping a mere 0.02%. The strong rebound DFJ experienced two weeks ago is a good sign for DFJ’s future. Spending just one trading day below the 200-day MA was enough to send traders into a buying frenzy, pushing DFJ quickly back towards a bullish stance. DFJ is a BUY.
Vanguard Global ex-US Real Estate ETF (VNQI) dipped 1.16%. VNQI continues to test a recent low near the $53 price level. VNQI has a long history with this price level, managing to recover twice and move higher. With global markets recovering, the outlook for global real estate is improving as well. As economies recover, and consumers and investors begin to feel more secure, real estate buying invariably sets in. VNQI is a HOLD.
iShares S&P Global Timber & Forestry Index (WOOD) lost 1.76% after pulling back from a new 52-week high and hitting 2013’s highest resistance level for a second time. Expect WOOD to bounce at or before the 50-day MA and attempt $53 once again. WOOD is a BUY.
Market Vectors Biotech ETF (BBH) ended the week flat, after hitting a new 52-week high last week. The Biotech Boom continues to move higher as BBH’s chart shows healthy momentum. Consolidating its recent gains, and readying for the next leg up, BBH is a BUY.
ProShares Ultra-Short 20+ Year Treasury (TBT) fell 1.87% last week. With the recent confirmation of the next Federal Reserve Chief Ms. Janet Yellen, expect TBT to move higher over the months to come. Market watchers expect good things from Ms. Yellen and believe she has what it takes to wind down Quantitative Easing with the proper finesse so as not to disrupt markets. TBT is a BUY.
Icahn Enterprises, L.P. (IEP) gained 6.60%. Looking at IEP’s chart, it appears that IEP is “reverting to the mean” and stabilizing near the 50-day MA and $110 support level. Like Buffett, Icahn is not someone you want to bet against over the long term. IEP is a HOLD.
Global X Guru Index ETF (GURU) lost 1.05%. GURU is closing out its 13th dip over the past year and preparing for another leg up. This may be an excellent time to increase your position. GURU is a BUY.
The Blackstone Group (BX) rose 0.79% over the past week and hit another 52-week high. The stock also now is trading up above its IPO price from all the way back in 2007. Blackstone’s Vice Chairman Byron Wien appeared on CNBC yesterday predicting a 20% rise in U.S. markets for 2014. Let’s hope he’s right. BX will report earnings on Jan. 30, before markets open. BX is a BUY.
Latest Special Reports
In addition, as a courtesy, read my new special report, Top 4 Keys to Profiting in the Q4/Q1 Wildfire Rally, which includes time-critical information you can use as 2014 begins. Also, 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.
Upcoming Appearance
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