The Market Melt-up Continues

Nicholas Vardy

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

U.S. markets continued to melt up last week, with the S&P 500 rising 1.38% and the NASDAQ climbing 1.33%. Global markets ended the week flat with the MCSI Emerging Markets Index down 0.11%.

Big gainers in your Bull Market Alert portfolio included the ProShares Ultra Real Estate ETF (URE), which rose 2.79%, and Mobile Telesystems OJSC (MBT) which added 1.04%. Tata Motors Limited (TTM) moved back above its 50-day moving average and once again is a BUY.

You were stopped out of EOG Resources, Inc. (EOG) for a 10% gain, after booking 170% gains in your remaining options last week.

I looked long and hard this weekend for a recommendation I could make for this week’s Bull Market Alert. Truth be told, I found a few opportunities that I put on my watch list. But I just couldn’t offer them to you this week.

There are a handful of sectors in the U.S. stock market that are soaring — most notably energy, as your gains in EOG Resources, Inc. (EOG) confirm. Biotech has also bounced nicely from its sharp sell-off. That all said, I have been worried about overly positive market sentiment for a while. The combination of the S&P 500 grinding higher and higher, with extremely low volatility, is almost “too good to be true.” And the crucial market sentiment indicators I look at agree.

One collection of market sentiment indicators on CNN Money I look at is now at the highest I have ever seen it.

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If you look at market sentiment (and technical indicators) as I do, you know that you make your best investments when market sentiment is negative. That’s when no one wants to touch the stock market. Right now, we are at the opposite extreme.

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Perhaps the best long-term news is that many still view this market with a great deal of skepticism. I am actually not one of them, as I think we have plenty more to go between now and the end of the year.

But with the S&P 500 up six consecutive days, odds are that we are due for some kind of a pullback. That will offer a better entry point for some of the stocks on my watch list.

So I plan to offer one of those recommendations in next week’s issue of Bull Market Alert.

Portfolio Update

AbbVie Inc. (ABBV) dipped 1.59%, even as it hit a new 52-week high briefly on Friday. ABBV is in the bidding process to take over drug-maker Shire (SHPG). As of Friday, Shire had rejected three offers from ABBV, causing higher-than-usual volatility in ABBV’s stock price. ABBV is a BUY.

Tata Motors Limited (TTM) gained 1.75%. TTM dominates the India automotive markets, holding the top spot for largest manufacturer of automobiles by revenue. TTM rose above its 50-day moving average (MA) last week to become a BUY.

Visa Inc. (V) gave back 0.85% last week. From a technical perspective, Visa’s chart is very bullish. The $209.50 price corresponds directly to the meeting point of the 50-day and 200-day MAs, providing tremendous upside potential. V is a BUY.

Mobile Telesystems OJSC (MBT) added 1.04%. As I mentioned last week, MBT is just below the 200-day MA, which is causing a bit of a sticking point. However, MBT appears destined to move higher. With Russian tensions continuing to ease, and Vladimir Putin mentioning the possibility of cease-fire talks, this Russian telecom giant appears able to move upwards in the weeks ahead. MBT is a BUY.

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iShares MSCI BRIC (BKF) dipped 0.48% for its first week in your portfolio. BKF managed to come within just cents of its 52-week high last Wednesday, only to pull back slightly over the following two days. This bet on the BRIC nations is primed to move higher as investors refocus on the large emerging markets. BKF is a BUY.

Nicholas Vardy

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