End-of–year contrarian buys

Ending 2016 with four contrarian purchases:

  • DBA- Agricultural Commodity ETF. General Ag commodity prices have not recovered since the 2008 Recession.  In fact, they’ve been in a long term secular decline.  However, occasionally DBA offers a brief relief rally.  DBA is currently consolidating below its 50dma and is about 1.5% above a long term supporting low.  I think it presents a reasonable risk for a short term trade into the first quarter.
  • VHT- Health care ETF. Pharma and Biotech stocks have been depressed for the past 18 months, primarily due to concerns that government price controls might be imposed.  The sector is down some 18% for the year.  While I do believe that political intervention is a threat, I also believe that long term health care is a good investment.  Therefore, VHT offers value as it consolidates around its 50dma and is potentially a long term hold.
  • EWW- Mexico ETF. The Mexican stock market has been deeply discounted because of concerns that Trump will restrict trade, border crossings, and impose tariffs.  While this is all probable, I think a small position in EWW is reasonable.  Mexico is the US’s third largest trading partner and the trade deficit is relatively small.  EWW is consolidating above long term support of $43.  Like the health care sector, I think Mexico is oversold and presents a good long term value.

The fourth position I purchased today is in a thinly traded ETF and I was not able to purchase the desired amount.  I’ll reveal more details about this trade after the market opens on Tuesday.

Best returns in the NEW YEAR !!!

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