Beware market bulls: The stock market's stellar rebound this year could be driven merely by a short-lived trend.
div > div.group > p:first-child"> Investors started this year in a buying mood, pushing up prices of last year's laggards, which is the logic behind Wall Street's"January effect," a theory that there is a seasonal rally in stocks during the first month of the year following a December decline due to tax reasons.
"Our advice for Q2: forget the last 90 days ever happened. The S&P 500's 11 percent bounce YTD was basically a January Effect on steroids with a Fed policy change adding gasoline to that fire," said Colas in a note to clients on Tuesday. Sometimes the"January Effect" is used to reference a jump in small cap stocks near the end of a year and into January, a theory popularized by the Stock Trader's Almanac. The iShares Russell 2000 ETF, a benchmark for small stocks, is up 13 percent this year, more than big caps.
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