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Boy, this one sent me back to the textbooks...
I've never seen the January Effect defined this way before. My
"bookshelf research" revealed that many people define it as "So goes
January, so goes the rest of the year." (TAAZ, Achelis, p.108)
Fosback calls this "January Barometer".
Lots of other define it like TASC does: "The tendency for securities
prices to to recover in January after tax-related selling is completed
before the year-end." (Volume 14, p.684)
This is the first time I've seen someone refer to a Small Cap/Large
Cap effect. I'm very interested in learning more - can you point me
to a reference?
Thanks,
Chip
---Greatelto@xxxxxxx wrote:
>
> Well, we all now know that the "January Effect" (i.e. that small caps
> outperform large caps) has been a big fizzle to date. But let's
discuss this
> a little bit. There may well be reasons to expect the "January
Effect" will
> still arrive, like maybe in February. The small cap momentum
indicators show
> this sector to be as oversold now as they have been since the fall
of 1996 and
> summer of 1997. If you look, it was at those times that the small
caps
> started their last two up waves of advance.
>
> Also I detect a lack of interest in this group. The OTC/NYSE ratio
of volume
> has fallen to a two and a half year low. Could this mean all the
scared money
> has left?
>
> As I see it, we could have a catch up rally in small caps from these
levels.
> However, I suspect it will not be a role of leadership vs the large
caps, at
> least not just yet.
>
> A related sidelight, the ING Barings Emerging Asia Mkt Index is down
over 60%
> from its highs of recent years, quite a severe decline. These
markets may
> well be grossly oversold and we could possibly see a sharp reflex
rally.
> Technically speaking, could these markets and our small cap market
be holding
> hands?
>
> Jerry
>
>
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