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What 2013 Could Bring for Gold, Apple, Bank of America, and More


From T3's Scott Redler, some key predictions about next year's markets.

The Minyanville - T3Live Morning Market Call is brought to you by is an online financial media network and education platform that provides active traders and investors with market analysis, real-time access to strategies, and in-depth training from real traders, real-time©. Learn more.

In 2012, the world was supposed to end, Europe was supposed to crumble, China was supposed to have a hard landing, and the US economic recovery was supposed to stall. In today's 24-hour news cycle, the media does not let any good crisis go to waste. As it turns out, the world didn't end and life goes on. The market did a great job this year of taking doomsday headlines in stride. As technicians, we read the tape and measure the price action rather than focus on the fear mongering.

Some mistake me for a perma-bull, but in reality I am far from it. In 2007-2008, for example, the price action confirmed the financial crisis at hand and dictated a more bearish bias. I adjusted my trading strategies accordingly and had one of my better years. To effectively maneuver the market, you have to arm yourself with strategies to take risk off during turmoil and put money to work when technical conditions improve. The bottom in 2008 provided an outstanding buying opportunity for those who adopted a prudent technical approach.

As the year winds down, it's time to reflect on my predictions for 2012 and outline my predictions for 2013. Overall, 2012 could be considered a very successful and constructive year for the market. The S&P (INDEXSP:.INX) is up 10.7% for the year despite the recent sell-off, the Nasdaq (INDEXNASDAQ:.IXIC) is up 13.7% and the Dow (INDEXDJX:.DJI) is up 5.4%. The healthy gains in the indices have come in the face of significant economic uncertainty: the US recovery remains plodding, the European debt crisis rumbles on, and China struggles to maintain its steep growth trajectory.

While I agree that there is a lot wrong with this world, I abhor the amount of negativity that has become so commonplace in the media. Fear mongers have done retail investors a major disservice by driving them away from equities with doomsday predictions and "bold predictions." Meanwhile, equities outperformed pretty much every asset class this year, and the indices dramatically outperformed most hedge funds. The Economist reported that the HFRX, a widely used measure of hedge fund industry returns, is up by only 3% this year while the S&P is up nearly 12%. The "smart money" hasn't been so smart.

As traders, we are able to maneuver in and out of positions more quickly and easily based on changing conditions. I have always believed in using technical analysis along with common sense to create a simple, blue collar formula for success. When you use too many indicators, you become paralyzed by indecision due to contradiction. I prefer to use a handful of simple tactics in order to identify and follow trends on several time frames.
Scott Redler is long BAC, YHOO. Short SPY.
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