Time to discuss the "January Effect?"
Somebody always brings it up about this time, so I thought I would since just I read the following article.
'January effect' on track: TrimTabs
By Jonathan Burton, CBS.MarketWatch.com
Last Update: 3:38 PM ET Dec. 22, 2003
SAN FRANCISCO (CBS.MW) -- Stocks will have a "January effect," after all, with share prices rising at least through the first few weeks of the new year, market data researcher TrimTabs.com said Monday.
But the Santa Rosa, Calif.-based firm, which tracks investor sentiment through cash flows into mutual funds, urged caution after that initial enthusiasm.
TrimTabs said its near-term market outlook turned "fully bullish" after noting that individual investors continue to pour money into funds, even after the year's powerful run-up and despite the fund industry's overhanging scandal.
At the same time, TrimTabs added, corporate stock buybacks are on the rise, while corporate insiders are likely to slow their selling. Insider selling is often seen as a negative indicator for future stock prices. In addition, the firm pointed out that the initial public offering calendar is light through mid-January.
But TrimTabs' bullishness appears destined to be short-lived. Lower supply of shares combined with stronger investor demand spells the "continuation of mania into 2004," the firm said.
TrimTabs noted disturbing signs that investors continue to chase recent performance, as small-cap and midcap stocks attract the most cash while laggard large-cap stocks are largely overlooked.
About $14.5 billion in new money cascaded into funds in November, TrimTabs added. "Fresh cash pouring into U.S. equity funds fuels the bubble," the firm said, warning that "the hangover from the stock-market party will await binging investors early next year." |
