Global markets have gone “on sale” as they are enduring the sharpest correction since August, after a relentless climb upward over the past two months. The current chapter of the European debt crisis and dangers of inflation in China have sent the markets into a tizzy. Two weeks ago, most of your positions were trading at or near yearly highs. After yesterday’s sell-off, most are back to where they were about a month ago. The MSCI Emerging Markets Index has dropped 5.8% since rising to a 28-month high on Nov. 5.
My own view is that the current market swoon — as sharp as it’s been — is more about “Mr. Market’s mood swings” than a fundamental shift in the case for global markets. From a technical perspective, my top indicators are showing that the market is just about as oversold as it was before the markets took off in early September. More often than not, investors who jump head first into markets like this one are likely to be rewarded handsomely.
With respect to your current Global Stock Investor positions, I am using the following rule of thumb: If the price of a position has fallen through or is near its 50-day moving average, I am moving the position to HOLD. This level often acts as a support to stock prices.
Otherwise, keep an eye on your stops.
Portfolio Update
Market Vectors Brazil Small-Cap ETF (BRF) fell back this week. Brazilian bank lending expanded in September at the fastest pace since June, as record low unemployment and salary increases fueled demand for consumer and corporate credit. Having dropped through its 50-day moving average, I am moving BRF to a HOLD.
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) ended the week lower. The Chinese yuan will become a global reserve currency to reflect China’s growing economic clout. CYB is a BUY.
iShares MSCI Malaysia Index (EWM) fell back sharply this past week. But full-year gross domestic product growth should hit 6.9%. EWM is now a HOLD.
iShares MSCI Singapore Index (EWS) also fell back this week. Singapore’s non-oil domestic exports surged 34.5% year-on-year in October, the biggest annual jump since December 2003. EWS is a HOLD.
iShares MSCI Taiwan Index (EWT) dropped back less than its Asian rivals. This technology-heavy index is one of the strongest performers in the world, even during this correction. EWT is a BUY.
iShares MSCI South Korea Index (EWY) traded within a few cents of its record highs just a few days ago, but then fell back sharply. EWY is a HOLD.
Freeport-McMoRan Copper & Gold, Inc. (FCX) traded as high as $108.01 last week, before dropping below the $100 level. This stock has demonstrated good relative strength compared to others. A bet on commodities, FCX remains a BUY.
Claymore/BNY Mellon Frontier Markets (FRN) dropped back sharply, as component Colombia was unusually weak, and Chile remained unusually robust. FRN is now a HOLD.
CurrencyShares Japanese Yen Trust (FXY) has disappointed by not rising as markets swooned, falling back from record highs. Japan’s currency remains a defensive HOLD.
Global X FTSE Nordic 30 ETF (GXF) fell below its 50-day moving average, as Northern European markets swooned. GXF is now a HOLD.
Market Vectors Indonesia ETF (IDX) hit a record of $92.62 just last week. Like Taiwan, it has remained relatively strong compared to its peers. IDX remains a BUY.
JinkoSolar Holding Co., Ltd. (JKS) fell below the $30 level for the first time since late October. This is a volatile play that is now a HOLD.
Las Vegas Sands Corp. (LVS) has pulled back and is now technically oversold. Think of the pullback as a second bite at the apple, as Asia’s Las Vegas isn’t going anywhere. LVS is a BUY.
Market Vectors Russia ETF (RSX) pulled back to its 50-day moving average and is now a HOLD.
iShares MSCI Turkey Invest Mkt Index (TUR) fell back on the global sell-off, and is flirting with its 50-day moving average. TUR is a HOLD.
Vale S.A. (VALE) pulled back this past week as well. The Brazilian mining giant said on Tuesday that it will launch an offer to pay up to $3.3 billion for the remaining shares of Vale Fertilizantes from a group of companies that include U.S.-based Bunge. Vale is now a HOLD.
P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy or on my new blog, NickVardy.com.
