We are now ready to start the all-important fourth quarter, and if you’re keeping score the bulls have a nearly insurmountable lead on the bears.
With markets up well into the double digits through nine months it would take a monumental disaster for the bulls to lose the game this year. Of course, stranger things have happened. But looking beyond the overall big picture, where might the opportunities be as we wrap up and put a bow on 2013?
SECTOR WINNERS
The third quarter saw some very solid gains from technology, cyclicals and industrial names. The Dow and SPX peaked again just recently but the Russell 2000 also hit an historical high. This index is broad and carries names from many sectors.
EYE ON ENERGY
For the upcoming quarter energy seems to be a good place to be. I would favor the drillers/service names like NOV, HAL, SLB and ESV. Natural gas and shale drillers have been on fire, names like EOG and PXD. I would buy pullbacks on these names. Technology may also continue strength as the year fades, names like CRM, NVDA, INTC, VMW and QCOM may be the leaders. Momentum is not hard to find either, and if the market finishes strong we’ll see money flowing into LNKD, FB, PCLN, TSLA, NFLX, GOOG and AMZN. Most of these names are at/near all-time highs, so the money is still flowing.
OCTOBER STOCK MARKET CRASH
While they say October is the classic ‘crash’ month (where most have occurred, save for the flash crash which was May), sentiment here is still rather mixed. There is not the love for stocks that has been noted during previous crashes, so I’m not sure there is one to happen without a specific catalyst. The worries are there, but just not the spark to light a fire.
Disclosure: Lang has positions in CRM, INTC, VMW, QCOM, NFLX, NOV and FB.
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Bob Lang has a newly re-launched website at www.explosiveoptions.net, where he manages subscribers, writes a newsletter, hosts webinars and has just opened a brand new chat room.
