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Investors Trading Like It’s 1995: Analyst

Althea Chang
Big Data Download

The worst-performing sectors so far this year could actually outperform by year's end, according to one analyst.

Based on analyses of S&P 500 performance during years that were closely correlated with 2013 so far, traders have been switching from investing in strong performers to investing in the strong companies within weak sectors, according to Bespoke Investment Group analyst Paul Hickey.

S&P: 2013 vs. 1995

The year that best correlates with 2013 so far is 1995, Hickey said. That year, "from late May through year-end, the sectors that had led the market in the first five months of the year tended to have in-line performance, but the sectors that had lagged outperformed the market by a wide margin," Hickey said on "Big Data Download."

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The five best-performing sectors from the beginning of that year through May 19, 1995, ended up gaining 13.5 percent through the rest of the year, Hickey said, while the five worst-performing sectors during that period gained 23.9 percent by the end of the year.

If traders focus on strong companies within weak sectors again this year, the materials, energy and utilities sectors, which have been out of favor so far, are likely to post higher share gains this year than health care, financial, consumer staples and consumer discretionary stocks, which have been performing well, Hickey said.

Among those sectors, Hickey said he expects shares of Quaker Chemical (KWR), Advanced Energy Solutions (AEIS) and ConocoPhillips (COP) to see a boost by year-end.

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The technology sector, which has been skewed by Apple (AAPL), has otherwise been underperforming, Hickey said. But that sector will likely outperform by the end of the year as well, he said.

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