January Stock Exchange Phenomenon

By Author: Julina LePaintz
Total Articles: 1
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The term "Year Enders" is a very common term among equity traders in the months of November till December. In a nutshell the name comes from the tax selling that is involved with mutual funds, hedge funds, and individual investors selling their stock holdings. There are various reasons why these funds or individuals are selling some of their stock holdings but usually it is the low priced nonperforming stocks that they are selling.

Some of the characteristics of these stocks are low prices, out-of-favor sectors, and /or large institutional interest stocks. The stocks are also at year lows, all-time lows, or near lows. Most of the time the stocks are under $10 per share.

Once the selling stops from the various holders, these low priced stocks will have volume increases on up days. These big volume up days are a sign of buyers coming back into the stock. Since all the sellers are gone from the stock the big buyers push the stock up because there are no more sellers. These big price moves in the stock increases the volatility which creates good opportunities. Volume also increases in January because ...
... people were on vacation and are back. Sometimes these large moves can happen for a few days or weeks.

Since the stocks are low priced, they are going to have large percentage moves quickly. One will have to be quick, nimble, and fast on their toes to capture these gains. Big volume increases is key in timing the move.
A independent financial writer that writes about various trading ideas and uses NYSE volume for market feel in her writings.