This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Top Trades Outside of Tech

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 click here .

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.

Fronteer Development

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 (FRG) 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.

Neurocrine Biosciences

Last year's dogs could become this year's winners, or at least stop barking for a few months. Last May, Neurocrine Biosciences (NBIX) 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.

AsiaInfo Holdings

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 AsiaInfo Holdings (ASIA), 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.

The Health Care Select Sector SPDR (XLV) 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.

Krispy Kreme

I'm not sure which category Krispy Kreme (KKD) 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.

At the time of publication, Farley had no positions in the stocks mentioned in this column, although holdings can change at any time.

Alan Farley is a professional trader and author of The Master Swing Trader. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback; click here to send him an email. Also, click here to sign up for Farley's premium subscription product The Daily Swing Trade brought to you exclusively by TheStreet.com.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs