The rebound in emerging market stocks since May 20 has pushed the iShares MSCI Emerging Markets ETF (EEM) well above its 25- and 50-day moving averages and given us a new buy signal. With the Cabot Emerging Markets Timer flashing a green light, we’re ready to put a little more money to work, and we have two portfolio actions tonight.
First, we’re going to complete our position in Weibo (WB) by buying another half position. WB blasted off from a tight four-week base on May 27, and has been running higher on good volume. BUY ANOTHER HALF.
Our second action will be to take a full position in NetEase (NTES), which has been on our watch list since May 20. The stock rallied from 130 in late April to above 170 in late May, and has been trading sideways in the 170s for almost two weeks. This kind of consolidation after an energetic rally is a sign of strength. We also note the high-volume buying on May 30 as investors bought into Chinese stocks in response to the inclusion of 14 Chinese ADRs in the MSCI Emerging Markets ETF. BUY.
Our one full buy and one half buy will increase our exposure to emerging market stocks to 80%, leaving a reasonable 20% on the sidelines as both insurance against possible pullbacks and a reserve for more buying if the market continues to be supportive.
There are no other changes in the portfolio tonight.
Buy another half position in Weibo (WB) and a full position in NetEase (NTES).