Excerpt from CNBC quoting DataTrek’s Nick Colas:
…. “Despite Wednesday’s record-breaking rally, the Dow and S&P 500 are still on track for their worst December since the Great Depression. While much of the blame has been cast on the Federal Reserve, President Donald Trump’s tweets and the trade war, one overlooked explanation for the bleeding is tax selling.
Although the year-end tax selling intensified December’s stock rout, it will likely yield to a bounce in January, 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, according to Nicholas Colas, co-founder of DataTrek Research.
“The idea is that beaten up small cap stocks tend to trade higher in January as tax loss selling abates and more normal buy-sell balances reassert themselves,” Colas said in a note to investors”….
Read the full article here on CNBC!