Technology led the market higher in 2012, with the Powershare QQQ (Nasdaq:QQQ), representing the Nasdaq 100 index, out pacing other major indexes, such as the S&P 500 SPDRS (ARCA:SPY). This strength makes the sector one of the ideal ones to watch during bullish months in 2013.

Much of the hype in technology was due to Apple (Nasdaq:AAPL), which was up more than 70% for 2012 in September, but fell hard off those highs in October and by November was only up about 30% - still a great year. The long-term chart of Apple provides clues as to what 2013 has in store for the stock, and how to trade it.

Apple 10-year monthly
Figure 1: Apple 10-year monthly.
Image Courtesy: thinkorswim


Apple is currently in a pullback mode. Entry near the long-term trendline - requiring some patience - is a great trade candidate for 2013. The trendline currently intersects near $410. Therefore, through 2013 the $400 to $500 price range is the entry point based on the historic trendline.

Apple is still the leader in the technology space, and watching it provides insight into technology as a whole. If Apple's stock is strong in 2013, expect the entire technology sector to be strong. On the other hand, if Apple is weak it will likely pull the entire sector down .

Smartphones and tablet devices are everywhere, and it is questionable how much more market penetration can occur. Therefore, something new in the technology space is likely to be coming down the pipe in the next year or two - it may come from Apple, or it may come from somewhere else.

Next: Top Investment Trends For 2013: Emerging Markets »

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