10 Updates

Diversifying Your Portfolio Globally

Apr 3 2014, 12:52pm CDT | by

The better than expected news on the economy and hopeful jobs numbers pushed the S&P 500 to another record close. Though the Dow Industrials had its highest close of 2014, it is still 0.1% below...

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16 weeks ago

Diversifying Your Portfolio Globally

Apr 3 2014, 12:52pm CDT | by

The better than expected news on the economy and hopeful jobs numbers pushed the S&P 500 to another record close. Though the Dow Industrials had its highest close of 2014, it is still 0.1% below its all-time high. The analysis of the Dow stocks indicates they are starting to act better and, in the second half of the year, these large-cap, high yield stocks could catch up.

The Stoxx Europe 600 has closed higher for the sixth day in a row, as it has gained 3.7%. The ECB meeting is being watched closely as many are hoping that the low inflation rate will spur another rate cut. Stocks in Asia have also moved higher as the Nikkei 225 hit a three month high on Wednesday. It added another 0.84% in Thursday’s session to close at 15,071. A close above 16,320 will confirm the breaking of its fourteen year downtrend.

In February’s article “Should You Go East or West?” I took a long at both the European and Asian markets. They had rallied sharply from the February lows and I was looking to buy on a pullback. Several of my recommended buy levels were hit on the recent correction, but have these markets really turned the corner? If you are not invested globally, what should you do now?


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Chart Analysis: The Vanguard FTSE Europe (VGK ) is a low-cost way to participate in Europe’s growth. It has over 500 stocks with 20% in the top ten holdings. The United Kingdom makes up 32.9%, with approximately 14% in France and Germany. It has a yield of 3.85% and an expense ratio of 0.12%.

  • The weekly chart shows that, after peaking at $60.63, it corrected 4.8% to a low of $56.90.
  • The pullback tested the highs from last fall, line b.
  • The 20-week EMA was also reached and this is characteristic of a normal pullback.
  • The upper boundary of the trading channel, line a, is now at $61.72 with the weekly starc + band at $62.05.
  • The quarterly R1 resistance (see arrow) is now at $63.16.
  • The weekly OBV pulled back to its rising WMA but will likely close this week at new highs.
  • There is even more important OBV support at line d.
  • The 20-day EMA is now at $58.80 with stronger support at $57.61, which is the quarterly pivot .

The Vanguard FTSE Pacific (VPL ) has an expense ratio of 0.12% with 812 stocks. In addition to 56.4% of its holdings in Japan, it has 19.3% in Australia, 11.3% in Korea, 8.9% in Hong Kong, and 3.7% in Singapore. It has a yield of 2.55%.

  • The weekly chart shows what appears to be a long-term flag formation .
  • There is next resistance at $61.20 from the start of the year with the weekly starc+ band at $61.82.
  • There is additional resistance at $62.19, which was the October 2013 high.
  • On a breakout above the resistance at line e, the chart formation projects a move to the $72-$74 area.
  • The weekly OBV shows a broad trading range, lines g and h.
  • The OBV tested its rising WMA just over two weeks ago and shows a pattern of higher highs.
  • The bullish readings from the monthly OBV do suggest that this is a pause in the uptrend, not a top.
  • The daily OBV (not shown) has broken its downtrend from last September’s, so all three OBV measures are positive .
  • The 20-day EMA and quarterly pivot are in the $58.53 area.


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The WisdomTree Japan Hedged Equity (DXJ ) has 312 stocks and hedges its yen exposure. The ETF has approximately 17% in the consumer cyclical, industrials, and technology. It yields 1.28% and has $11.8 billion in total assets.

  • In early February, DXJ had a low of $44.66 but held above these lows in March as it dropped to $44.90, line b.
  • The daily starc+ band is now being tested with the daily downtrend at $49.62.
  • The quarterly projected resistance is at $50.31 with the weekly starc+ band at $50.69
  • A completion of the flag formation, or continuation pattern , has upside targets at $55-$57.
  • The 128.2% Fibonacci target is at $57.25.
  • The daily on-balance volume (OBV) has moved well above its WMA and broken its short term downtrend.
  • There is further OBV resistance at line c, and the weekly OBV (not shown) also looks strong.
  • There is short-term support now at the gap in the $46.46-$46.91 area with the quarterly pivot at $47.00.
  • This includes the rising 20-day EMA at $46.72.

The Guggenheim China Small Cap (HAO ) has total assets of $236 million with an average volume of 130k, which is a bit thin. It has approximately 270 stocks with an expense ratio of 0.75% and tracks the AlphaShares China Small-Cap Index.

  • The daily chart shows that HAO dropped to a low of $24.68 on March 27, which was just above the February low of $24.59.
  • The close Wednesday was at the daily starc+ band with the downtrend, line d, at $26.56.
  • The early March high was $26.72 with a December high of $26.83.
  • An upside breakout from the continuation pattern , lines d and f, has upside targets in the $28.50-$29.50 area.
  • The daily OBV surged through its downtrend, line g, this week.
  • The OBV has support now at the uptrend, line h.
  • The weekly OBV (not shown) is very close to moving back above its WMA.
  • The 20-week EMA is at $25.75 with the quarterly pivot (line e) at $25.60.

What it Means: It continues to be my view that the US economy will get even stronger as the year progresses and this is also true of the EuroZone. This should be beneficial for the Asian markets, including China.

The recent strength in the emerging markets is an encouraging sign and the depth of the next pullback will be important. Those not long, as previously recommended, should look for a pullback to the 20-day EMA to buy.. Aggressive investors could look to buy Guggenheim China Small Cap (HAO ) on a pullback, but be sure to use limit orders.

How to Profit: For the Guggenheim China Small Cap (HAO ) go 50% long at $25.76 and 50% at $25.38, with stop at $24.42 (risk of approx. 4.5%).

Portfolio Update: For the Vanguard FTSE Europe (VGK ) should be 50% long at $58.16 and 50% at $57.28, use a stop now at $56.67.

For the Vanguard FTSE Pacific (VPL ) should be 50% long at $57.36 and 50% long at $56.44. Use a stop at $56.18.

For WisdomTree Japan Hedged Equity (DXJ ) should be 50% long at $45.06. The recent low was $44.90, so the second buy level at $44.34 was not hit. Use a stop at $44.74.

The order for Wisdom Tree Europe Small-Cap Dividend (DFE ) was not filled, but may issue a new recommendation.

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

New Zealand All Blacks Squad Announcement
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Ra ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin H ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states la ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed sa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year invol ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Sch ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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