The January Effect
According to the Stock Trader's Almanac, the January Effect is a phenomenon whereby small-cap stocks tend to outperform large-cap stocks starting around mid-December and continuing through the first few months of the new year.
This trend, observed and tracked repeatedly for decades, can be attributed to several factors, yet one of the more noteworthy considerations is tax-loss selling. Specifically, it is thought that tax-loss selling, which often factors prominently at the end of a year, marks a nadir for some of the worst-performing small-cap stocks; therefore, an expectation arises that they are poised for better price action on a short-term rebound trade.
Wanting to get this occurrence on your radar, we've a compiled a list showing some of the worst-performing Russell 2000 stocks of 2017, broken down by sector.
The list is not all-inclusive and a stock's appearance on the list is not to be construed as a buying recommendation from Briefing.com. Rather, it is intended to be a starting point for traders/investors looking to possibly capitalize on the January Effect.
The criteria used for our screen included the following: (1) Russell 2000 stock (2) daily volume greater than 100,000 shares and (3) a share price greater than $5.00.