Holding on During the Dog Days of Summer

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Note from the Publisher

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Roger Michalski
Publisher, Eagle Financial Publications
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Last week was a lousy one for global stock markets across the board. The Dow Jones fell 2.86%, the S&P 500 pulled back 2.21% and the NASDAQ tumbled 2.33%. The MCSI Emerging Markets Index fared the worst, ending the week down 4.39%.

You did have a couple of big gainers in your Bull Market Alert portfolio. The ever reliable Ambarella Inc. (AMBA) jumped 11.80% while also hitting a new 52-week high. Qualys, Inc. (QLYS) climbed 5.27%.

Recall you booked over 150% gains in your remaining AMBA options during the week. Raise your stop in AMBA to $118.50 to lock in at least a 20% gain in the stock.

You were stopped out of the ProShares Ultra Nasdaq Biotechnology ETF (BIB) with a 25% gain. Finally, you were also stopped out of Silicon Motion Technology (SIMO) at a loss.

Overall, it’s a tough market out there. Here are a couple of eyebrow-raising statistics.

First, the S&P 500 has suffered 73 negative days so far this year. That’s the most since 2002 through this date. And that includes the meltdown of 2008.

Second, the S&P 500 had back-to-back flat quarters for the first time since 1904. This has happened only one other time in the past 125 years for either the Dow or the S&P 500.

Third, the CNN Fear & Greed Index has fallen to single-digit levels yet again, for the second time, equaling its record for all of 2014.

So, yes, there are a handful of profitable themes out there like Ambarella and the biotech sector — both themes which we have revisited and profited from several times in 2015. And such negative market sentiment is positive for the second half of the year.

But I am holding off on making a new Bull Market Alert recommendation this week as we enter the dog days of summer and until the market settles.

Portfolio Update

Halyard Health Inc. (HYH) lost 1.76% over the previous trading week. Raymond James initiated coverage on HYH last Tuesday at “Market Perform.” HYH will report earnings on Aug. 4 before markets open. HYH is a HOLD.

iShares MSCI Hong Kong (EWH) dipped 1.59%. The Hong Kong market has been subject to the moves of the significantly larger Chinese markets as of late. However, some stabilization seems to have taken root as the gyrations of the recent correction appear to be waning for now. EWH remains a HOLD.

Qualys, Inc. (QLYS) climbed 5.27%. QLYS will report earnings on Aug. 3 after markets close. This stock experienced a correction back in late June, dipping below its 200-day moving average (MA). However, after several weeks of sideways consolidation trading along an established support level and given its coming earnings report, last week’s strong gain signals a positive outlook. QLYS is approaching its 50-day MA but remains a HOLD for now.

Ambarella Inc. (AMBA) jumped 11.80% last week. You also sold all of your remaining options in this position last Wednesday to lock in a better-than-150% gain. AMBA is benefitting greatly from GoPro’s recent stellar earnings report. AMBA touched upwards to a new 52-week high last week — a price level AMBA fell from during a mid-June correction. Since that correction, and its recommendation, AMBA has moved significantly higher on strong momentum. Raise your stop to $118.50 to lock in at least a 20% gain. AMBA is a BUY.

Avago Technologies Limited (AVGO) gave back 3.88% last week as turbulence in the major indexes buffeted many stocks. Avago is a supplier of chips to Apple (AAPL) for several of its technological devices. However, a post-earnings-report dip in Apple’s (AAPL) stock last week weighed on AVGO as well. AVGO is a BUY.

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