On Demand

STOCKS: Uh Oh, Here Come the 2013 Predictions $XLF $VAR

by

It's that time of year when prognostications abound about what's in store for 2013.

Stick with the home builders! Embrace the financials! One word: Ugh.

Editors and producers love predictions because it helps clicks and ratings. It makes for great headline fodder, but for individual investors, it's not very useful information at all. Every year at this time, I'm asked for my predictions for the coming year. I play along, begrudgingly, although every year I find myself saying under my breath: "How the heck I am I supposed to know?"

DON'T LISTEN TO THE HEADLINES
Don't let the headlines tell you what to buy in 2013. Many investors do, and they end being in the wrong stocks. Instead, let the market tell you what to buy. Institutional buying will uncover the new leadership in 2013. Right now, there's still a lot of money on the sidelines so it's impossible to tell where the new leadership will come from at this point.


It could very well come for the financials. The Financial Select Sector SPDR Fund (XLF) is setting up in a nice base, but it's not under accumulation yet. Perhaps it will be soon. Don't buy in anticipation of it happening. Wait for it to happen first.


xlf.png

STOCK TO WATCH
Meanwhile, health care stocks are always a good source of leadership, but it's a big sector so it's important to be in the right sub-groups. I've got a ton of names in the sector on my watch list, including medical-device maker Varian Medical Systems (VAR). Strong fundamentals and technicals tell me it has the potential to be a leader in 2013. The company's systems and software are used for treating cancer. It's in a bullish technical set up that could yield an upside breakout soon. It has a consistent track record of growth and shares remain under accumulation. It's been holding gains smartly after its earnings-inspired gap up on October 27. Price action like this can often presage additional price strength.



var.png

[What's on your Watch List? Let us know what you are watching, share a comment below.]

= = =
Read our daily Markets section for more trading ideas.

Tags:

2 Comments

Join In on this conversation, post a comment below.
Visitor - Ken Shreve: $16.44 is the line in the sand at this point. Need to see some price gains from here with daily volume exceeding 60 million shares.
Reply
Reply
KiraBrecht: Great story as always Ken, thanks! How will we know when/if XLF begins accumulation? Is there a certain level you'd like to see it clear?
Reply
Reply

About the Author

Ken Shreve got his start in the financial markets with Investor’s Business Daily (IBD). He spent over 10 years as an editor and columnist for IBD and its Web site Investors.com.  He also acted as the Investors.com "Market Wrap" anchor and presented IBD investing workshops and seminars nationwide. Shreve continues to provide market commentary on national radio and has appeared on CNBC.

He now writes Ultimate Growth Stocks, a weekly newsletter at TFNN and hosts Breakout Investing, Monday through Friday from 3-4 PT. Learn more at www.kenshreve.com.

Ken has also contributed to TheStreet, Realmoney.com and Realmoneypro.com and has been a regular contributor to Jim Cramer’s “Off the Charts” segment on Mad Money.

For more information about his growth stock newsletter and model portfolio, e-mail him at ken.shreve@yahoo.com

Membership is Free. Join Now in less than 5 seconds! Alternatively Join or Sign In here.