U.S. Markets Flat as Global Stocks Pull Back

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 week for global stock markets. Following yesterday’s sharp rally, the Dow Jones ended the week 0.69% higher, the S&P 500 jumped 0.53% and the NASDAQ eked out a 0.01% gain. The MSCI Emerging Markets Index was down 1.36%.

Big gainers in your Alpha Investor Letter portfolio included the WisdomTree Japan Hedged Equity (DXJ), which rose 1.89%, and Berkshire Hathaway (BRK-B), which added 1.31%. Both of these positions also hit new 52-week highs. Your most recent recommendation, Skyworks Solutions Inc. (SWKS), gained 0.96%.

Two positions, Google Inc. (GOOGL) and KraneShares CSI China Internet ETF (KWEB), fell below their 50-day moving averages and moved to a HOLD.

September is pretty much living up to its difficult reputation with the market essentially treading water since the start of the month. As the chart below confirms, historically the next week or so has been a difficult one for U.S. stock markets.

September historical returns by day of the monthSource: SentimenTrader.com

More generally, measures of market sentiment have also been stuck in the fear-to-mildly-neutral mode.

As a result, the market’s meandering a bit over the past week or so is not bad news. It is pretty much par for the course at this time of the year. The good news is that based on historical data, a rally in the final week of September may be in the cards as we enter the final quarter of the year.

The Wharton School’s Jeremy Siegel is the one of the most accurate (and bullish) market pundits who still has Dow 18,000 in his sights. This is a solid 5%+ gain from yesterday’s close.

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I tend to agree. That said, with many of your holdings more volatile than the overall market — I believe that you are likely to see bigger upside in many of your Alpha Investor Letter portfolios — when the traditional Q4 rally begins.

Portfolio Update

Berkshire Hathaway (BRK-B) added 1.31% last week and hit a new 52-week high. A recent photo of Warren Buffett’s remarkably humble office revealed the lack of any technology other than an office desk phone. That shows you that you do not need the latest bells and whistles to be great. The meaning of “great” in this case equates to $250-billion growth in shareholder value over a 50-year period. That’s great. BRK-B is a BUY.

WisdomTree Japan Hedged Equity (DXJ) rose 1.89%. DXJ spiked to another new 52-week high early last week and is now on its way to breaching price levels not seen since 2008. Although much of this is a long-term economic recovery following a tsunami-related market crash, recent increases are the direct results of a weakening yen and strengthening dollar trend. DXJ is a BUY.

The Blackstone Group (BX) closed the week with a very dull 0.00% gain. More exciting is what you see when you look at a long-term daily chart for BX. The last time BX touched its 200-day moving average (MA) was in late 2012. That was promptly followed by a stellar 26% gain. That signals additional excitement in the months ahead. BX is currently a HOLD.

Market Vectors Gulf States Index ETF (MES) came in flat last week. MES tracks the largest companies in the Gulf Cooperation Council (GCC). Those companies, based in some of the wealthiest nations in the world, also are near the world’s geographically unstable hotspot. Nevertheless, this exchange-traded fund (ETF) continues to churn out profits in your portfolio. MES remains a BUY.

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PowerShares Dynamic Energy Exploration & Production ETF (PXE) dipped 0.89% over the past five trading days. Pressure on oil prices has been immense over recent weeks, and PXE is currently down 3% in your portfolio. With conflicts continuing in key energy-producing regions and the coming energy demands of the fall and winter seasons, this position remains a good bet. Technically, PXE is also another great candidate for a strong 200-day MA bounce. PXE remains a HOLD.

Skyworks Solutions Inc. (SWKS) gained 0.96% since joining the portfolio. This play on the “Internet of Everything” has everything going for it, and for quite a long time to come. The wave of new non-computer Internet-connected devices is just beginning, and you are catching this wave quite early. SWKS is a BUY.

Nicholas Vardy

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