A Bullish Outlook for the Remainder of the Year

Last week was broadly flat for global stock markets. The Dow Jones was up 0.53%, S&P 500 rose 0.67% and NASDAQ jumped 1.37%. In contrast, the MCSI Emerging Markets Index dipped 0.17%.

The one big gainer in your Alpha Investor Letter portfolio was Skyworks Solutions Inc. (SWKS), up 5.07%. All other gainers rose by less than 1%.

Nevertheless, the broad direction of your portfolio is positive, as several of your positions did hit new 52-week highs: Berkshire Hathaway (BRK-B), WisdomTree Japan Hedged Equity (DXJ), Markel Corp. (MKL), PowerShares DB US Dollar Bullish ETF (UUP) and Skyworks Solutions Inc. (SWKS).

I remain bullish on the market over the course of the next three months. In addition to positive seasonality, here’s another reason why.

Through last Friday, the S&P 500 hadn’t moved any more than 0.077% (up or down) on a closing basis. That’s the tightest series of closes ever.

That all changed yesterday, when the S&P 500 broke out to the upside. According to sentimentrader.com, breakouts to the upside like these have boded well for stocks historically, especially in the intermediate- to long-term future.

Three months after similar upside breakouts in the past, the S&P returned an average of 4.0% with no losses of more than -1%. After three months, only three occurrences out of a total of 24 showed negative returns. And except for one, those losses were insignificant.

I also wanted to let you know about my regular columns on the Trading Deck section of the Wall Street Journal’s Marketwatch.com website. Since I started contributing regularly, three out of my last four articles have been the most popular among the ones published, and they have attracted hundreds of comments.

Finally, I want to remind you of today’s quarterly update conference call. If we have your phone number, we will be calling you at 1:00 pm EST today. If not, you can call  1-800-211-4774 to give us your phone number.

Portfolio Update

Berkshire Hathaway (BRK-B) gained 0.59% over the last week to hit yet another a new 52-week high. About 58% of Berkshire’s equity holdings are concentrated in just four stocks: Wells Fargo (WFC), IBM (IBM), Coca-Cola (KO) and American Express (AXP). BRK-B is a BUY.

WisdomTree Japan Hedged Equity (DXJ) rose 0.87% and hit a new 52-week high last week. After Japan fell back into recession, the Japanese government delayed implementation of its new consumption tax. DXJ is a BUY.

Market Vectors Biotech ETF (BBH) pulled back 1.38% this week. Holding 26 securities in the basket, BBH is largely concentrated on the top three firms — Gilead Sciences (GILD), Amgen (AMGN) and Celgene (CELG). These three firms combine for 37.2% of the fund’s assets. BBH remains a BUY.

Global X Guru Index ETF (GURU) gained 0.88%. GURU stocks are slowly but surely making a comeback, rising 7.04% over the past month. GURU is a BUY.

Markel Corp. (MKL) gained a robust 0.22% last week to hit a new 52-week high. Markel lead portfolio manager Tom Gayner bought Deere & Co, Unilever PLC and Marsh & McLennan Companies Inc., LLC, and sold Teva Pharmaceutical Industries Ltd., International Game Technology and Northern Trust Corp during the three months ending September 30, 2014. MKL is a BUY.

Skyworks Solutions Inc. (SWKS) soared another 5.07% last week. Three earnings estimates moved higher in the past month. Consensus estimates increased from $3.59 per share 30 days ago to $3.98 per share today, an increase of 10.9%. SWKS is a BUY.