January In The Markets — What Does It Look Like For Traders?
Happy Boxing Day! As we hurtle towards the new year we’re taking a look at 2023. Will January in the markets be as hungover as we are? What is the January Effect anyway? And which stocks could do well? As you may have said before eating your turkey yesterday, let’s dig in, shall we?
The January Effect
Good news might be on the horizon for stock traders. January has been known to bring a rally in the stock markets — a phenomenon known as the January Effect.
Before you get too excited, this rally is very artificial. Most analysts put it down to an increase in buying, which follows December price drops when investors often close their positions or sell off their investments to offset their tax payments or capital gains.
But a rally is a rally, right? Cause for celebration, surely? Well, maybe not. The January Effect pretty much petered out as soon as people started realising why it was happening. In the 29 years since 1993, there have been 17 rallies in January (57%) and 13 stock market drops (43%), making the odds only a tiny bit better than flipping a coin. Sorry if we got your hopes up!
Stocks that may do well
Here are a few stocks that might do well in January. No promises!
#1 Disney (DIS)
Average January gain: 3.97%
Price 01.01.2022: 156.76 USD
Price 23.12.2022: 88.01 USD
YTD % change: -43.86%
Disney investors who have ridden the (many) lockdown waves may soon be about to see their fortunes turn.
With it’s many business activities, Disney stock is almost like buying into a ready-made ETF. And many of these sectors are doing well, especially streaming. Disney Plus now boasts more subscribers than Netflix and their user numbers continue to go in opposite directions.
Disney has an average January gain of almost 4%, and stock price has rallied in 21 out of the last 28 years, or 75% of the time. So the time to jump in might already be here.
#2 Ericsson (ERIC)
Average January gain: 4.48%
Price 01.01.2022: 100.48 SEK
Price 23.12.2022: 61.69 SEK
YTD % change: -38.60%
The Swedish provider of equipment and services for telecom and networking infrastructure has had a mixed bag in 2022. A disappointing start to the year was made worse when sales fell off owing to the worldwide semi-conductor shortage.
However, the demand for 5G solutions is strong and is driving organic growth in four out of five geographic reporting areas. The company has also been working hard to improve its logistics and supply chains.
So Ericsson’s long-term business prospects look really nice, and with an average January gain of nearly 4.5% and the fact that price has rallied in 20 out of the last 28 years, or 71% of the time, it might be worth a serious look.
#3 Alkermes (ALKS)
Average January gain: 10.15%
Price 01.01.2022: 24.15 USD
Price 23.12.2022: 25.49 USD
YTD % change: +5.55%
The only stock on this list that looks like it’ll have a positive end to 2022, Irish biopharmaceutical company, Alkermes, may well continue that fortune into the new year.
Strong sales figures are fuelling the company’s success. Sales of the proprietary drug Vivitrol increased around 9% year over year to $96.5 million, while year over year sales of Aristada increased almost 10% year over year to $75.7 million.
Combine that with a massive 10.5% average January gain and the fact that price has rallied in 20 out of the last 26 years, or 77% of the time, and you could have a real prize on your hands.
Let us know what you think!
What are you trading in January? Have you ever experienced the January Effect? Tweet us at @_contentworks.
Top fundamental events this week
This is the week that the markets pretty much forget, with hardly any action on the cards. We’d suggest that you use the time to brush up on your trading strategy before things get busy again. Or, just stick Netflix (or Disney Plus) on and have a rest. Switching off when it’s quiet is a very important part of trading. Get your down time in so you can come back fresh in the new year.
● JPY — BoJ Kuroda Speech
No events planned.
No events planned.
No events planned.
● CNY — NBS Manufacturing PMI (DEC)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon and Merry Christmas!
The Contentworks team