January: Hot Tips From A Cold Month

The market's advance in January caught investors off guard. Some investment pros take the January jump as a prognosticator of good tidings to come. Sam Stovall, senior market strategist at Standard & Poor's, thinks the so-called January Barometer is a good indicator of how hot certain sectors will be the rest of the year. Made famous by Yale Hirsch's Stock Trader's Almanac, the January Barometer says that if the S&P stock index climbs in January, the market will rise toward a full-year gain. Stovall goes further: The 10 stock-market sectors that performed best in January will end up beating the broader market the rest of the year, he says. Since 1970, the 10 best-performing groups have outperformed 71% of the time, he says. The groups' rise averaged 16.6%, vs. the S&P's 7.8% gain. Based on the winning sectors, Stovall picked some stocks (table) that he thinks will outscore in 2001. Among them: Adobe (ADBE), IBM (IBM), Broadcom (BRCM), and AOL Time Warner (AOL).

To continue reading this article you must be a Bloomberg Professional Service Subscriber.