I am back from my great New Years vacation and ready to write my first article of 2012 on the first day of 2012 trading. On this first day of 2012 trading, the stock market bulls were off and running. Futures when I woke up were already well into the triple digits on the DOW. This is reassuring after a very volatile 2011 that ended the year flat on the S&P 500 and slightly up a few percent on the DOW. Now I have the feeling volatility is still going to be prevalent in 2012 as there are still a bunch of issues that are not solved, namely the European financial crisis and the US debt issues as well as the US Presidential election that is not far away from this first day of 2012 trading. On this fact, I would make sure to keep a diversified portfolio as well as be ready to sell the rips and buy the dips. Moving in and out of this volatile market is the only way to make a decent return and beat the averages. I highly doubt that the rest of the year will be as smooth as this first day of 2012 trading.
First day of 2012 Trading Winners
There were many winners on this first day of 2012 trading. All of the sectors that I said will be outperformers in 2012 were up big today. I took a bold step on my last article predicting that financials would be an outperformer this year similar to what happened after the big 2009 crash. On today’s first day of 2012 trading financials lead the market. European banks such as Deutsche Bank and Credit Suisse were up 5%. The three big investment banks remaining; Goldman Sachs, JP Morgan, and Morgan Stanley; were all up over 5%. Even Bank of America and Citigroup were up nearly 5% and 8% respectively.
The second area that I said would outperform in 2012 was the energy sector. Oil and natural gas names were up big today on the first day of 2012 trading. Namely the US shale plays that I keep reiterating were in the news. The French oil giant Total signed a $2.3 billion contract with Chesapeake Energy for a stake in its massive Utica shale. Also the Chinese oil giant Sinopec signed a big deal with Devon energy. This just confirms my long term thesis of US shale play is in the early innings and we will make tons of money with these names. These names were up over 5% each.
Lastly, we had a massive move in my favorite tech stock name for 2012, Google. Google hit a new 52 week high today on the first day of 2012 trading to $665 a share. I made a bold statement that Google will be above $1000 a share within 2 years and I still stand behind that theory. Apple also is continuing to creep higher on its strong sales from the holiday season and the hopes of its new iPad release coming soon. Apple closed back above $411 a share within a few percentage points of its 52 week high.
First day of 2012 trading Losers
As the majority of the market was up on this first day of 2012 trading, there were not too many losers. The biggest losers were some of the short ETFs. The Ultrashort Silver ZSL was down over 13% as silver rose with the overall market. Other names that didn’t work today were the safety plays that were the big winners of 2011. McDonalds started this first day of 2012 trading down one and a half percent. Overall, I think this name will appreciate at least 10-15% in 2012. I would use any weakness to make an entry as a key component of anyone’s diversified portfolio. Another loser today was one of my all time favorites that I have always held, Altria. It was down over 3% today as it recently broke the $30 level and had a warning from Barrons due to its big debt load and declining popularity of smoking in the US along with US regulatory issues. I personally think the company is set up pretty well to continue to increase its dividend in 2012. I have heard from many professional investors that they are moving holdings out of Altria and into its international twin Phillip Morris International which has zero exposure to US markets and also has more growth potential with more people to buy its products.
Overall, this first day of 2012 trading was a great day but I would not look the other way for too long as any news out of China or Europe can erase today’s gains overnight.
Happy New Year to all,
Vinny's Stock Watch
DJIA 16889.279 -25.791 -0.15% NASDAQ 4400.865 +4.661 +0.11% S&P 500 1962.21 -2.47 -0.13% F 17.4618 +0.1618 +0.94% AKAM 60.00 -0.07 -0.12% FFIV 110.43 -0.86 -0.77% GOOG 577.70 +6.60 +1.16% NFLX 441.10 +2.55 +0.58% DECK 82.47 -0.97 -1.16% OPEN 103.02 +0.05 +0.05% DNDN 2.2601 -0.0199 -0.87% WLT 5.615 +0.125 +2.28% SCCO 32.92 -0.25 -0.75% GMCR 121.24 -0.14 -0.12% EPD 77.2999 -0.1301 -0.17% 2014-07-11 12:09
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