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Despite the powerful gains in the major averages last week many investors are still on the sidelines and Moneyshow's Tom Aspray has four strong sector stocks that are ripe for new investment as we head into 2013.

The stock market may face its first real test of the New Year this week as the short-term overbought technical readings and general skepticism over last week's rally makes a correction likely.

The powerful readings from the weekly NYSE A/D line that I discussed in last week's Scaling the Wall of Worry indicates that the intermediate trend for the stock market is clearly positive. Therefore, stocks have the potential to rally quite a bit higher in the first quarter of 2013.

The market tracking ETFs like the Spyder Trust (SPY) were higher in December as SPY gained almost 3%, but some sectors did much better with the Select Sector SPDR Financial (XLF) up over 8%. Many stocks in the financial sector did even better as Bank of America (BAC) was up well over 22%.

Concentrating on the market leading sectors and more importantly the stocks in these sectors should allow you to be well-positioned for a first quarter rally in stocks. These four stocks have significant upside potential and should be bought on a pullback.

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Chart Analysis: Roper Industries Inc. (ROP) is a $11.3 billion machinery company that is part of the industrial sector. The stock broke through weekly resistance in the $113.25-$113.42 area last week.

• The long-term weekly uptrend, line a, was tested Monday as the low was just above $108.
  
• The weekly relative performance has shown a pattern of higher highs since it bottomed in the latter part of 2011.
  
• The RS line has turned up from its rising WMA after making new highs in November.
  
• The weekly OBV broke through resistance, line c, last summer which was a very positive sign.
  
• The OBV has been leading prices higher for the past few weeks.
  
• There is near-term support at $112.60-$113.20 with much stronger in the $110-$111 area.
  
• The currently quarterly pivot is at $109.25.
  

Kansas City Southern (KSU) is a $9.7 billion railroad company, which is a 7.8% holding in the iShares Dow Jones Transportation (IYT) whose chart also shows a major upside breakout.

• The move through resistance at line g, completes of the continuation pattern with the next upside targets in the $95-$97 area.
  
• The relative performance analysis also shows a major breakout to new highs as resistance at line e, was overcome.
  
• The uptrend in the RS (line f) is consistent with a long term outperforming stock as it has gained almost 150% more that the Spyder Trust (SPY) since 2009.
  
• The on-balance-volume moved through major resistance, line g, in December and has turned up sharply.
  
• The pullback in late December was on low volume.
  
• There is initial support now at $85.50 with stronger in the $84 -$84.50 area.
  
• KSU is trading well above the quarterly pivot at $109.25, which is consistent with a positive outlook for the first quarter.
  

NEXT PAGE: 2 More Strong Stocks