Over the last few weeks, the price of the fund has begun to stabilize and show some signs of life. Earlier this month, supply concerns squeezed futures slightly, due to declining exchange-certified inventories. Since bottoming around $21 per share, JO hovered around $22 a share for the last week.
Investors could position themselves long JO with a clear exit point below the most recent lows. Supply concerns, poor weather or a simple squeeze could create high returns. Technically, the chart has started to show some signs of consolidation.
I don't like calling bottoms, but I think that you could take JO long with a stop around the most recent lows, about $2.00 below the current trading price.
Emerging Market Woes
Emerging markets really weren't the place to be in 2013. Slower-than-anticipated growth and currency troubles have held back the returns of the many ETFs that follow the developing world. The iShares MSCI Emerging Markets Fund (EEM) and the Vanguard FTSE Emerging Markets Fund (VWO) have both dramatically underperformed domestic equity markets over the last year, with negative returns of 5% and 7%, respectively.
Some analysts are predicting a broad emerging markets rally in 2014. But I think investors should try to pick and choose their exposure to the space. Consider an investment in Mexico through the iShares MSCI Mexico Fund
J.P. Morgan recently noted that it expects strong economic growth acceleration for Mexico, to 3.4% in 2014, up from 1.4% in 2013.
After 2013 domestic reforms in Mexico, J.P. Morgan predicted enhanced cost competitiveness for the country's manufacturing economy and a broad sustainable growth outlook. Moreover, a continuation of the economic recovery in the U.S may spill over into Mexico. Manufacturing goods in Mexico offers many advantages to American producers, including faster shipping times, lower shipping costs and duty-free transportation across the border.
As the American relationship with China becomes more and more complicated, we could start to see our neighbor to the South pick up some manufacturing business.
Investing for 2014
Try diversifying in 2014 to take advantage of growth opportunities. The Macau gaming industry looks strong and stable. Infrastructure improvements within the region should allow greater access to casinos for more of the Chinese population. Commodity coffee sits at multiyear lows, despite rising demand for the hot stuff. Play coffee with some protection, considering using a stop loss to protect against a continuation to the downside. Lastly, check out Mexico for your emerging-markets exposure. Strong growth, economic improvement and a growing U.S. economy should aid an investment in the region.
At the time of publication the author was long on LVS and JO, but did not own any of the other securities mentioned.
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