Trading the ‘January Effect’ – archyde

It fits that the market ended in 2021 with a sell algorithm, all the FATMAAN names for the day and some rotation promotions.

All of the indices fell on the last day of the year, but the breadth was positive, with more new highs than new lows as some traders tried to position themselves for a significant “January effect” – the idea that stocks were out in the first month of the year rise.

The business media are full of stories of the major indices’ big gains this year, but the real story is the massive underperformance of the majority of investors. This was the year of mega-cap stocks, and if you weren’t overweight in the small group of giants, you will likely struggle to keep up with benchmark exits.

That is history now, and our focus should be firmly on what comes next. I have no idea what that will be, but I’m pretty confident that there will be many great trading opportunities as events go. I am sure that 2022 will look very different than 2021.

I wish you all the best in the new year. Be optimistic and prepare to go to work on Monday.

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