by Daniel Putnam | January 2, 2013 8:33 am
The relatively quiet markets of late December are about to become a thing of the past, as today marks the beginning of the 2013 investment calendar. As we begin the New Year, “uncertainty” is the buzzword of the day. While it’s rare to hear anyone claiming that the future actually is “certain,” the current phase does indeed offer more than its share of question marks.
One prediction seems rather safe, however: “Noise” surrounding the fiscal cliff debate — and the debt ceiling battle still to come — is likely to bring a higher volatility in the month ahead. Therefore, the key to successful trading in January is to be prepared to capitalize on quick market movements until headline risk subsides. To that end, here are nine stocks that could deliver some beta in the month ahead due to their current technical positions. Put these names on your watch list as you prepare for the new trading year:
Apple (NASDAQ:AAPL): Not that Apple isn’t on most traders’ screens already, but January is setting up to be a particularly important time for the stock. Apple just completed its third trip into the $500-$510 range, and a drop into the $400s brings the stock into an area where there is much less volume history than there is at $500 and above. From its break above $430 on Jan. 25, 2012, it took AAPL only 14 sessions to reach $500. If Apple stock indeed hits this air pocket in the weeks ahead, be ready to pounce on the value opportunity.
Select Sector SPDR-Materials (NYSE:XLB): Materials stocks didn’t fully participate in the second-half rally in global equities, but that could change in 2013 if the continued stabilization in China’s economy prompts investors to begin value-hunting in this area. Keep an eye on XLB — after rising to $37.54 on Monday, the ETF is closing in on its long-standing resistance at $38. If XLB can make it above this level on a fiscal cliff deal, it has a relatively open road to its early-2011 high near $41.
ConocoPhillips (NYSE:COP): Conoco has been dead money for nearly two years now, but the longer-term chart is beginning to look bullish. Providing the stock can hold its lower support line, COP is primed to take out its previous (adjusted) highs in the low 60s. This one might take some time to play out, but after a weak 2012 for energy stocks, this makes for an interesting contrarian play. If nothing else, you get a stock yielding 4.6% on a trailing P/E of just 7.
Newmont Mining (NYSE:NEM): Gold stocks are at a potential inflection point that isn’t necessarily visible in the XAU Index or broad-based ETFs such as the Market Vectors Gold Miners ETF (NYSE:GDX). A look at the Newmont chart tells the story: After rebounding twice near its current support at $43, the stock had fallen to $45.03 by Friday’s close before bouncing more than 3% on Monday. At this point, NEM’s ability to hold the support line is a key indicator for the rest of the sector in the weeks and months ahead.
And Newmont isn’t the only gold stock in this position: Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG), IAMGOLD (NYSE:IAG) and Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) have all printed similar formations. But Newmont is closest to support, and it’s also the big kahuna of the mining sector, which makes it the one to watch in January.
Sigma-Aldrich (NASDAQ:SIAL): This chemicals/life sciences stock has four hits in the $74-$76 range, and it closed Monday at $73.58. SIAL has exhibited some beta in recent years, so a breakout is likely to provide traders with a nice pop.
PetSmart (NASDAQ:PETM): After delivering a two-year return of 76%, PETM looks to be at an inflection point. The stock, trading at $68.34, has bounced around in the $65-$70 range for seven months. A move out of this range in either direction is likely to be sizable, but with the stock trading at the high end of its historical valuation range, look to trade this one from the short side.
Ultra Petroleum (NYSE:UPL), Concho Resources (NYSE:CXO) and Swift Energy (NYSE:SFY): Small-cap energy is an interesting area for traders and technicians alike, and these three beaten-down names provide fodder for both. All three are well off of their 52-week highs, and all three are sitting right at support. From a technical standpoint, these stocks could have some decent upside if they can hold support and move above their 200-day moving averages. However, the recent trend in the exploration and production space is for stocks to slip below their previous lows rather than holding. See larger names such as Occidental Petroleum (NYSE:OXY), Apache (NYSE:APA) and Devon Energy (NYSE:DVN) for Exhibits A, B and C. So watch this area closely, but employ an abundance of caution.
As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.
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