Monday, December 26, 2011

Most Important Stocks To Watch In 2012

With only 4 trading sessions left in 2011, all gurus are out there throwing their predictions for 2012.
I am not going to downplay their ability to foretell the exact level of S&P 500 at the end of 2012, but I would not put any money on their subjective opinion. Traders can see minutes, hours, days, weeks, maybe a few months out, but if you hear (from anyone) the exact number for an index or a stock one year out - it is just a guess.

So I decided to let my followers know what I think about 2012. I am still not sure what the exact outlook should be, due to enormous uncertainties facing the stock market in the next year. Rather I would like to focus on what I see, not what I think. Next year may be as volatile as this, it could just be range bound all the way. I am way too realistic, practical, and humble to predict more than a few months out.

The biggest thing for next year (in my opinion) is to concentrate on what will lead and what may lag, and just go with that. I am going to watch the next two stocks as my best guide for trading DOW and NDX. These companies have the biggest weighting in their respective indexes. They are the leaders in their space, which also happens to be the biggest weighted in S&P 500. So if we know where these two stocks will go, we will be able to predict the direction, albeit not the exact percentage of the stock market's move. They by far have outperformed their peers, and their indexes - not surprising, they are the leaders.

So here they are compared to their indexes. I will not be surprised that we will get the same picture at the end of the next year, whichever way they go, up or down. Once again, we just want to be correct on the direction.

This is my very modest prediction - IBM and AAPL will dramatically influence the outcome of where DOW and NDX trade in 2012.

click on chart to enlarge

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