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Seasonal Trends for Year End
10/29/2012 10:00 am EST
Trader and analyst John Person reviews some underwatched stocks that he thinks may do well into the end of the year. He also shares his year-end timing for gold.
We're talking seasonal trends with John Person. John, what's going on for this season? What are we seeing? What are we looking at? What sectors are hot? What are the commodities going to be looking like?
Well, I'll tell you what, a lot of interesting things with this year's election. People are really on edge as the presidential election cycle, and actually we saw a boost in valuations of the indexes reaching their highs.
People are maybe struggling to find some value, but if we continue to see strength going into 2013 after the election, I think there are a couple of sectors that people haven't really focused on. It's the securities dealer/broker-dealer sector.
And in the broker-dealer sector you could look at...if we see a pickup in volume, we see activity, obviously broker-dealers are going to start to pick up in valuation. But there are a few stocks within there: if the exchange volumes pick up, then exchanges are going to do well.
So I see New York Stock Exchange (NYX) for one, and then also I think the CBOE (CBOE), because there's been more popular demand, or at least there's been an increase in options use amongst hedge funds and the individual investor. So CBOE could stand to benefit.
But you know, I think traders and investors may want to look at delving into this gradually, because traditionally we see that space kind of bottom out toward the end of November. You know, I think at this point we've seen a nice move in both of those names-NYX as well as CBOE-but look for some pullbacks. I think there's a strong chance that we're going to see continued strength headed into the first quarter of 2013.
Wow, and do you see anything for commodities? I mean, obviously gold seems to be doing well, but what about the industrial metals?
I would like to talk about gold, because actually I think from a fundamental standpoint, we have a much better positive story for gold as we head into the beginning of October, with quantitative easing never ending. And of course, Mario Draghi and the ECB, with their quantitative easing companionship program as well to help bail out the Euro nations.
But we don't see gold breaking out to test the all-time highs that we made in September 2011. Traditionally, from a seasonal year-over-year analysis, gold traditionally has a hard time moving up in October through early to mid-November. That means we could see a correction in the gold market.
If people are analyzing this, we take a look at several different reports that I look at, namely the CFTC commitments of traders report, and it shows that speculators as well as hedge funds are heavily net long this market here. And it's not really grinding higher on bullish news, so I'm a little skeptical.
I would tell anyone who is not invested to not chase this market, especially as we're into October to the middle of November. Look for a correction, and I think as you get through December, start looking for position plays on the long side of gold if we do get that correction I'm anticipating.
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