What about combining of these two factors, The January Effect in small-caps and the Presidential Cycle?
By December 14, the weekly OBV was above its WMA, confirming the January effect.
The January effect is the tendency of low price, small-capitalization stocks to outperform in January.
FORBES: Why There May Be A January Effect For Large-Cap Stocks
Michael Burke of Investors Intelligence says the January effect may have come even earlier this year.
This indicated that the January effect, where small caps outperform, was going to be followed in 2012-2013.
Some analysts have argued that the January Effect has moved into December as investors look to front run this tendency.
The OBV moved above its WMA in the middle of December, which was perfect timing for the January effect.
Also, be sure you like the long-term prospects, as there is no guarantee a January effect will lift these stocks.
FORBES: Why There May Be A January Effect For Large-Cap Stocks
Research has also shown that screening for small-caps down significantly from their highs in mid-December respond the best to the January Effect.
Does that prove the January effect works but only when January is positive?
Our research in the Almanac shows that most of the January effect, where small-cap stocks outperformed large caps, happened the last two weeks of December.
The January effect is also a stock market phenomenon that occurs at the end of the year as investors begin to fret over taxes.
In the December 12 article Profit Now From January Effect, I recommended two closed-end funds, one of which was the Royce Value Trust ( RVT).
The fitness industry has an entirely separate type of January effect that sees a spike in sales of home exercise equipment, diet programs and gym memberships.
Due to the uncertainty about 2013 tax rates, it is possible that we are seeing some stocks getting set up for a large-cap version of the January effect.
FORBES: Why There May Be A January Effect For Large-Cap Stocks
One optimistic note for the near term, though: Tax selling, which tends to depress stock prices, will end in December and thus lay the groundwork for a January effect (when investors gobble up the marked-down stocks, leading to a mini-rally).
Reimbursement for end-of-life counseling has recently returned, in the form of a Medicare regulation to take effect January 1, 2011.
If automatic changes that represent the fiscal cliff go into effect January 1st, Congress can address the fiscal cliff early next year and pass retroactive legislation.
And I completely resent the 2007 law, to go into effect January 1, that will ban their manufacture, and eventually their sale, in the U.S. So imagine my glee this morning that I could postpone that year-end trip to the hardware store to stock up on a lifetime supply of 100 watts.
Under that scenario, the new Congress convening in early January would vote to lower taxes from the higher rates that will go into effect in January when the Bush cuts expire, with the new top rates staying intact.
But a series of planned tax hikes and spending cuts due to take effect in early January could give Treasury further time if they take effect as scheduled, Geithner said last week.
Its ban on unlocking went into effect in January, prompting a backlash from some consumers.
The first phase of a free-trade zone is due to take full effect on January 1st.
ECONOMIST: Vague hopes of integration and messy bilateral squabbles
The deal had been negotiated in April and was due to take effect in January.
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