Trading 3 Stocks on Fear and Greed

12/15/2012 12:00 pm EST


L.A. Little

Contributing Editor, Minyanville

L.A. Little explains how three stocks may be big winners in 2013 based on current measures of fear and greed in the market.

Well, I know for myself, if the markets go up a little bit I start to get euphoric and if the markets go down a little bit I start to panic.  I don’t think I’m alone in that, LA.  I find that traders, when the market goes down even just a little bit, start to panic about everything, the broad market as a whole.  When that happens to you or you see that happening, are you thinking about the next opportunity?

You have to.  I mean, you’ve got to be looking at—again, if you look at the time frames and you say panic, well, panic typically happens on a short-term time frame, so if you start looking at the intermediate, you start looking at the long term, it looks a lot different.  The charts look different and so you have to be looking at the next opportunity whenever everyone else is worried about the current conditions.

So there are some charts, for example, at this point, for me, that are looking very interesting.  Michael Kors is a well-known name, is fairly new.  It’s acting great in a market that’s going down.  When the market’s going down, you want to look for the stocks that are still looking good going sideways.  Those will be the next leaders.

So going into 2013, what stocks are you looking at?

I have three top ones that I like right now.  One of them is a name I’ve been in for a long time, still looks great is eBay.

No kidding.

Yeah, eBay is a great chart.  They’ve gone up—they went up about 30% in 2012.  I expect they’ll do the same thing in 2013.

They still own PayPal, that’s just booming.

PayPal was a great acquisition, and it was a sleeper acquisition that has turned into just a money maker.

It’s a monster.  They’re processing credit cards on the spot now, competing…

Well, they just did their thing with Visa not very long ago, so they’ve got a lot going for them.

So there’s eBay, there’s Michael Kors, what else do you like?

There’s some other names, in particular, there’s a gold stock, Randgold still looks good.  Gold itself is doing well.  Gold stocks themselves are difficult to own, though, because they have such large volatility and wide range, so you have to pick those up on retraces, not breakouts for the most part, but I believe there are some opportunities in that particular area as we go into 2013.

Anything else to round it all out?

Those are the ones that are particularly on my mind.  I think the main thing to do is to look at the financials.  If you look at the financials, they’ve got about a three-year period that they’ve been consolidating right underneath this ledge.  If they break out, it’s going to be a big move and the whole market’s going to move.

Well, 2013 could be a big year for eBay, but it could also be a big year for the financials.

It could be.

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