THE FINAL NUMBERS
NEWS: The breakdown of the merger between Microsoft (symbol: MSFT) Yahoo (symbol: YHOO) over the weekend and a surge in oil to $120 sent the markets lower to begin the week. The Dow closed off 88 points or 0.7%. The S&P 500 lost 6 points or 0.5%. The NASDAQ also lost 0.5% or 12 points.
THE BOTTOMLINE: After a two-day winning streak for the market and a rally that lasted five out of eight sessions, the market was due for a pullback. The rotation of money back into commodities and out of equities was also well overdue. Today’s action is not worrisome at all and to be honest with you, we had a fairly good day at PFG. Our commodity investments did well and helped pick up the slack of some of our losers.
The key this week will be the technical levels for me. As long as the S&P 500 can remain above 1400 on a closing basis, all is good. The index closed the session at 1407 today. The Dow just remain above 12,750, its support level - the index closed at 12,969 today.
McCALL’S CALL - FOLLOW BUFFETT INTO KOREA
NEWS: Over the weekend Warren Buffett and Berkshire Hathaway (symbol: BRKA) had their annual meeting in Omaha. There is always a laundry list of sound bites from Buffett throughout the weekend, but there was one that caught my attention. The Oracle of Omaha referred to South Korea as one of the best international investment opportunities.
THE BOTTOMLINE: Over the last few years Buffett has been moving his attention to overseas investments because that is where he feels the best opportunity lies. Over the years Buffett has focused on investing in businesses that he can understand and that have strong models that lead to future cash flows. But the key to his investment style is patience. He will wait for the opportune time to put money into an investment and once bought, give it time to grow.
The mention of South Korea is important because I have also been following the country for some time and also find it attractive. That being said, many of the South Korean stocks that trade on the US exchanges have had a rough time as of late. The iShares South Korea ETF (symbol: EWY) has struggled in 2008, but in the last two months has rallied and closed Friday at the best level since mid-January.
In this week’s issue of The ETF Bulletin (www.ETFBulletin.com) I discuss Buffett, South Korea, and specific ETFs and stocks that will give investors a gateway into the country. If you are not yet a subscriber please check out the website and consider changing your investment future!
DAILY ETF BULLETIN - COMMODITIES RALLY
NEWS: Last Friday I wrote about material and mining stocks sitting on support and ripe for a bounce -- well today they did just that. A spike in oil to a new all-time high and gold rallying from oversold levels sent money into the commodity ETFs. Oil closed with a gain of $3.65 to $119.97/barrel. The black gold traded above $120 intraday for the first time ever. Gold gained $16.10 to finish at $874.10/ounce.
THE BOTTOMLINE: A handful of ETFs that track the price of oil closed at new historic highs today. The Coal and Steel ETFs also finish at new highs as the commodity rally that so many have written off is back going strong. What makes me think there is more upside in the short-term for the commodities is the RSI readings. Most of the ETFs in the top 20 today have great charts, are either bouncing off support or at highs, AND the RSI readings are neutral. This suggests the ETFs are not yet overbought and therefore have more upside potential.
** There is a good chance we will look to add one of the ETFs in the commodities arena to a Portfolio in The ETF Bulletin newsletter in the coming days. All subscribers of the newsletter will receive a real-time email when the recommendation is revealed. To sign-up today for the weekly newsletter please go to www.etfbulletin.com.
Have a great night,
Matt McCall
www.pennfinancialgroup.com