The last day of the year is staring with some chaotic action. The indices gapped lower as many market players were looking for a continuation of yesterday's selling pressure. This triggered 'bear trap' buy programs that were unusually aggressive and long-running. The indices moved into positive territory and now the action has cooled off.
Breadth is very solid with 4800 gainers to 2230 losers which is reflected in outperformance by the Russell 2000 Small Cap Index (IWM) . There are only 126 stocks hitting new 12-month highs which is surprisingly low given how close the indices still are to all-time highs. This is mainly a function of the action being index driven rather than stock driven.
The tone of the action is positive but there is plenty of randomness due to the end of the year positioning that is taking place. I'm looking to take advantage of sharp drops in some of my favorite plays like Axsome Therapeutics (AXSM) provided at the open today, but mainly I'm looking for some tax loss selling plays that may bounce in January.
A few January Effect plays on my radar this morning include Personalis (PSNL) , Sangamo Therapeutics (SGMO) , Spark Networks (LOV) , ETFMG Alternative Harvest ETF (MJ) , SmileDirectClub (SDC) and Intelsat (I) .
It is important to keep in mind that the action right now is quite random. If you are looking for explanations about why a stock is moving in a certain way, you are not likely to find much logic but it should make for some interesting chart setups in January.
