Skip to main content

Off the Charts

Overall, 2012 could be considered a very successful and constructive year for the market.
Comments

The market screamed higher on the last trading day of 2012 as a fiscal cliff deal seems likely. The market closed the day on highs with the Nasdaq leading the charge. The Nasdaq closed up 2%, the S&P up 1.70% and the Dow up 1.29%.

Overall, 2012 could be considered a very successful and constructive year for the market. The S&P closed the year up over 12%, the Nasdaq up 16% and the Dow up more than 7%. The healthy gains in the indices have come in the face of significant economic uncertainty: the U.S. recovery remains plodding, the European debt crisis rumbles on and China struggles to maintain its steep growth trajectory.

The pattern in the S&P (SPY) is looking bullish as the recent pullback in the S&P held above the 50% Fibonacci retracement level. The market is now trading above its key moving averages and trading within up an upper level wedge that breaks to the upside above 1430.

2012 provided traders with many opportunities as solid patterns developed in the indices and in stocks across the board. From everyone at T3Live.com, we would like to wish you a happy and healthy New Year. We look forward to the opportunities that present themselves in 2013.

S&P (SPY)

Source: eSignal

View Chart »View in New Window »

Below are Scott Redler's Predictions for 2013. For the whole article, click here.

There are several clues I will be looking for in January to help navigate the market. Will we get continued strength in the banks? Bank of America (BAC) has emerged from the ashes and is leading the sector with an explosive move in December. I think Bank of America could get to $16 to $18 this year.

One factor that could limit the banks' upside in 2013 is the growing consensus that they will not be able to turn back many components of the Dodd-Frank regulation. The latest version of the Volcker Rule is expected to be more restrictive of bank trading activities and might now allow broad hedging of bank portfolios. Perhaps the new environment in the financial sector will be a positive, though, and investors will be more comfortable buying bank stocks knowing they are not taking on massive risk.

Bank of America (BAC)

Source: eSignal

View Chart »View in New Window »

Yahoo! (YHOO) is headed back in the right direction, I believe, thanks to new CEO Marissa Mayer. The former Google executive, who was the first female engineer at the company and a major part of its success, has the intelligence and experience to help YHOO redefine itself. The stock has had an impressive 34% run since early September, but if you zoom out the stock is just breaking out of a four-year lower-level base. I believe YHOO could get back to the $23 to $25 range next year.

Yahoo (YHOO)

Source: eSignal

View Chart »View in New Window »

Another stock I like on a technical basis is Boeing (BA). If you zoom out all the way to a monthly chart, BA is just breaking out of a multi-year mid-level base. I believe BA could get back to the mid to high $80 level.

Boeing (BA)

Source: eSignal

View Chart »View in New Window »

Facebook (FB) has impressed me with its ability to shake off the large IPO lock-up expirations we have seen over the past couple months. It appears insiders are not overly keen to sell more shares, which is a positive sign. The company has not yet solidified its business model the way LinkedIn (LNKD) has, but I feel they will improve upon that. I think in 2013 you could see Facebook get back to the $32 to $35 range. Technically it needs to trade and close above $28 to $28.80 first.

Facebook (FB)

Source: eSignal

View Chart »View in New Window »

Toyota (TM), I believe, has strong prospects for 2013. The auto company finally got its $1.1 billion settlement out of the way last week, which appears to be a relief for investors. In my opinion the stock could get back to the $110 to $120 area in 2013.

Toyota (TM)

Source: eSignal

View Chart »View in New Window »

Mosaic (MOS) is my favorite stock in one of my favorite fundamental sectors: the ag's. The phosphate and potash producer could get back to the $75 area this year, in my opinion.

Mosaic (MOS)

Source: eSignal

View Chart »View in New Window »

A stock I am cautious on for 2013 is IBM (IBM). The tech bellwether has done a decent job reinventing itself from a hardware company to an ideas company, but I think it's a bit overpriced at these levels. On the weekly chart you can see the steep uptrend that has been in place since late 2008 that is close to being broken. A break and close below $185 could lead to some technical damage on the macro chart of IBM. The stock hasn't been able to gain much footing since breaking below its 200-day moving average.

IBM (IBM)

Source: eSignal

View Chart »View in New Window »

On a macro chart, 2012 appears to be a consolidation year for Gold (GLD). Many analysts fear the possibility of a currency war in 2013 in which central banks debase their own currencies in an effort to export their way out of recession. This type of inflationary activity would have Gold bugs salivating, and likely lead to a dramatic price increase for the commodity.

Gold bugs were disappointed this year despite continued dovish policy from the Federal Reserve and world central banks. With gridlock in Washington, Ben Bernanke and company have taken it upon themselves to try to stoke the sluggish economic with monetary policy measures. The results have been minimal, and the measure taken somewhat questionable, but we have not seen the wave of inflation that some have expected. The Fed initiated "QE4" in December -- more than doubling the size of its monthly asset purchases -- but Gold has sold off in response.

SPDR Gold Shares (GLD)

Source: eSignal

View Chart »View in New Window »

At the time of publication the author is long AAPL, FB, BAC and YHOO.