Three Top Stocks for the Post-Summers Uptick

By  SEP 16, 2013 12:00 PM

The news that Larry Summers is no longer in the running for chair of the Fed caused a boost in stocks. Here are three market leading sectors for you to invest in now.


The 3% gain in the Dow Industrials (INDEXDJX:.DJI) last week was the best weekly performance since the beginning of the year. For a change, the Dow outperformed the S&P 500 (INDEXSP:.INX) by 1%. Since the late June lows, the S&P has outperformed the Dow by just over 2%.

Over the weekend, the news that Larry Summers had dropped out of the running for chair of the Federal Reserve has given global stocks a boost in early trading. Most of the eurozone averages are up over 1%. Even more impressive was the sharp drop in short-term yields and 150+ point gain in the Dow futures in early trading.

After last week’s positive market internals, the overnight action is not surprising, as the technical studies from Friday’s column "Stress Index Says Don't Worry Yet..." indicated that the worst of the selling was over.

It was even more important that several key sectors did stage important breakouts last week. Last week, I focused on the materials and energy sectors, but the industrials also became a market-leading sector last week.

These three stocks from market-leading sectors look attractive now for new purchase.

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Chart Analysis: The chart of the Select Sector SPDR Industrials (NYSEARCA:XLI) shows the weekly close above the August high, line a.
Caterpillar, Inc. (NYSE:CAT) has been holding support in the $78-$81.50 area, line f, since the summer of 2012.

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Newfield Exploration Co. (NYSE:NFX) is a $3.40 billion independent oil and gas company that closed sharply higher last week and last Wednesday’s volume was four times the average.
Sigma-Aldrich Corp. (NASDAQ:SIAL) is a $10.28 billion specialty chemical company that serves the life science and technology sectors. It has a current yield of 1.0%.
What It Means: These three stocks have only bounced from support, especially Caterpillar, which appears to be forming a long-term basis. Last week, I recommended both the Select Sector SPDR Energy (NYSEARCA:XLE)  and Select Sector SPDR Materials (NYSEARCA:XLB). Now I would also look to buy the Select Sector SPDR Industrials.

How to Profit:
Editor's Note: This article was written by Tom Aspray  of MoneyShow.

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No positions in stocks mentioned.

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