This column was originally published on RealMoney on Jan. 25 at 12:10 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please
After three weeks of stomach-wrenching turns, the tech sector is so disjointed that it's almost impossible to figure out how to play the group. You can chase around these four-letter favorites if you want, but I'd rather risk my capital in more reliable corners of the market. Let's focus today on the top non-tech trades.
To get a leg up on them, I've been scanning my databases, looking for rotation that exposes the stealthy action of speculators placing bets on new sectors, ideas and trade setups. This is January, the time of year when fresh cash burns big holes in the pockets of market players, so I figure that folks won't be sitting on the sidelines for too long, waiting for the elusive all-clear signal.
Big chunks of capital have poured into blue-chips, retail and biotech stocks in the past few weeks, but where is the rest of it going? Let's see where the money might be headed as we approach the second month of this interesting year.
Industrial metals and mining stocks have made a quiet comeback, with many of them challenging last year's lofty levels. Good stockpicking skills are required in taking sector exposure, because January performance has been uneven, to say the least.
Fronteer Development Group
is one lesser-known play in the group.
This is a mineral exploration company with properties all over the world. The stock rallied to an all-time high last week, in a powerful move that carried it above two-month resistance and the round number of $10. Look for price to consolidate near current levels before it starts another leg of this developing rally.
Last year's dogs could become this year's winners, or at least stop barking for a few months. Last May,
(NBIX - Get Report)
triggered a wave of sleepless nights and empty wallets when it dropped 34 points in a single session. The stock spent the next seven months looking for a bottom, before starting a weak recovery.
That uptrend has picked up steam in the past two weeks, with the company benefiting from good research news and a few analyst upgrades. But don't look for this stock to return to its glory days in the next six to 12 months. Instead, focus on the 200-day pattern resistance below $20 and take a profit when price approaches that barrier.
What's not to love about Asian plays these days? The broad range of these stocks trading on American exchanges and their excellent liquidity give market players all kinds of opportunities from which to choose. My favorite name in the group is
, a volatile issue that's still trading in single digits.
The stock has doubled in price since October but still looks like it has considerable upside in the weeks ahead. It stalled at $8.56 in late December, pulled back for a few days and gapped up to a new high last week. Notice how the latest pullback is marking out a rising channel, with support at $7.75. A drop to that level should offer the best entry price.
Health Care Select Sector SPDR
Health care stocks got bid up in recent months but took it on the chin with the broad market during the recent decline. However, the group is setting up for an excellent recovery, so readers should consider buying aggressively on pullbacks. Just make sure to choose the right trading vehicles.
Health Care Select Sector SPDR
showed a perfect breakout two weeks ago, followed by a classic pullback toward support. Downside volume has been surprisingly high this week, suggesting that price will drop through $34 before it runs back to the high. So be patient and try to pick this one up at that key support level.
I'm not sure which category
(KKD - Get Report)
should fall into. Is it a former momentum favorite that's looking for new love? Or perhaps it's a turnaround story that's turned around for so long that it's starting to get dizzy. In either case, the stock bottomed out in 2005 after a dramatic fall from grace that wiped out 90% of its value.
The doughnut maker hit a recovery high over $12 last May and pulled back. It returned to this level last week and broke out on Tuesday. Accumulation has been very strong with this issue for the past three months. These bullish factors support a continuation of the healthy uptrend and a reasonable price target in the upper teens.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider AsiaInfo Holdings to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.