The Hottest Sectors In 2012…

There’s no doubt, the market is off to a great start in 2012.  In fact, the S&P 500 is up by 3.0% so far.  With just another trading day left in January, I’d say things are looking pretty good for the market this year.

If you still have some money on the sidelines, you may be thinking about putting it back to work in the market.  Well, no need to wait for an engraved invitation my friend… now’s the time to get back in this market before it really takes off!

One of my favorite ways to participate in an uptrend is to follow the market leaders higher. 

Let’s take a closer look at the numbers…

So far this year, the top performing sectors include the Financials, Basic Materials, and Industrial Goods. 

Leading the pack is the financial sector… up by 8.6% year to date.  Right behind the financials is basic materials up by 8.5%.  And rounding out the top three is industrial goods at 8.4%.  These sectors are seeing impressive performance compared with the 3.0% gain of the S&P 500 index. 

And of all the sectors leading the market higher, I like the financials the best. 

Here’s why…

As you know, the financial industry has been beaten down for a long time.  In fact, the SPDR S&P Bank ETF (KBE) was down a painful 33% from January 2011 through November 2011.  For most of last year, we watched all the major players take huge hits to their market cap.  Financial stocks sold off left and right.  It was a real blood bath!

But amazingly, the financials have had a solid rally over the past two months.  Yet even after the recent rally in the sector, the KBE is still down by 20% for the past 12 months!  

It’s pretty clear, there’s lots of room left to run in financials. 

Now one of the reasons we haven’t seen the financials recover at an even faster pace has to do with the cloud still hanging over Europe.  As you’re probably aware, the Greek debt crisis is still unresolved.  While much closer, nothing is fixed just yet.

However, the word on the street is US banks shouldn’t feel a huge financial impact… even if Greece were to default.

Those are some big words… so who exactly is doing all the talking?

Fed Chairman Ben Bernanke, for starters.  Recently, Mr. Bernanke said a default by Greece would have little impact on US banks.  The actual quote was “very small”.  I’d say that’s a reliable source…

What’s more, JP Morgan Chase (JPM) CEO, Jamie Dimon, just came out last week and said, “The direct impact of a Greek default is almost zero.” 

Those are pretty strong words coming from both the Fed Chairman and one of the country’s most visible and vocal bankers. 

With prospects improving for US banks and a rally well underway… now is a great time to get in on the action. 

There’s no doubt, buying penny stocks is an inexpensive way to capture the uptrend.  In many cases, penny stocks move much faster than their big cap counterparts… so you can really amplify your gains. 

And with all the past bloodshed in the sector, there’s no doubt you’ll find a deep supply of financial penny stocks poised to rebound higher with the leaders.

Until next time,

Brian Walker

Tags: Basic Materials, Fed Chairman Ben Bernanke, Financial Sector, Greek Debt Crisis, Hottest Sectors In 2012, Industrial Goods, JP Morgan Chase (JPM), penny stocks, SPDR S&P Bank ETF (KBE)

Category: Financial Stocks, Industrial Stocks, Investing in Penny Stocks