Elaine Garzarelli Sees a Good Year in 2013 for Select Sectors

By on January 12, 2013

Elaine Garzarelli - Garzarelli CapitalElaine Garzarelli, president, Garzarelli Capital, was the guest market monitor on the Nightly Business Report this week. She said her 13 indicators were at 82 percent, “a very, very high level.” Garzarelli stated anything less than 30 percent would indicate a major sell, or bear market signal. A reading below 42 percent would be indicative of a 10-15 percent correction.

Garzarelli explained her indicators covered monetary policy, economic cycles, sentiment and valuation. The valuation indicators suggest the market will gain 10-15 percent this year, she added.

When host Tom Hudson asked how she factors in the tepid economic growth, Garzarelli responded they see economic growth of two percent this year and the S&P 500’s earnings gains will be modest at 5-6 percent. With S&P 500 earnings at $105 for the year and a multiple of 15 to 16 times earnings Garzarelli said it give them the gain they are looking for. However, she said if investors get in the right sectors the gain could be twice as much.

Garzarelli recommended the Consumer Discretionary Select Sector SPDR (XLY) reasoning that consumer confidence has turned up, along with lower oil prices and a housing market that is doing very, very well. Some of the stocks in this ETF include Home Depot, Disney and Ford, she added.

Garzarelli also sees gains for iShares PHLX SOX Semiconductor Sector (SOXX) on the premise that technology will grow three times more than real GDP this year. Semiconductors are the most leveraged and high beta area of the technology group, she added. The stocks in the sector include Broadcom, Intel, Taiwan Semiconductor and Texas Instruments, she said. Garzarelli pointed out SOXX is down 10% from its peak last year.

Garzarelli likes iShares S&P North Amer Tech-Multimd Ntwk (IGN) because it underperformed last year and is extremely cheap. Qualcomm, Cisco and Juniper Networks are in the group.

Hudson reviewed the ETFs Garzarelli recommended last year which showed gains between 10 and 15 percent. She said she still likes them, especially IWM which reached an all-time high a few weeks ago.

Garzarelli said her sector analysis fund is 100% invested in stocks and she holds all the positions discussed in the interview.

A year ago Garzarelli said she was very, very bullish which was the correct call [link].

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