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Small Cap Report: January Effect Now In Full Swing

ByNicholas Santiago
Published 02/04/2013, 12:52 AM
Updated 07/09/2023, 06:31 AM

Small cap stocks continue their hot streak. The January Effect continues in 2013. Each day another few small caps soar higher, leaving the ground, headed for the stratosphere. The January Effect is a term given to the pop in small caps during the first month of the year. It is caused by money rotating back into small caps after end of year selling has concluded.

Last week biotechnology stocks continued to be one of the hot areas for mega returns in the market. Arca Biopharma Inc. (ABIO) jumped from $0.38 to a high of $0.99. Keryx Biopharmaceuticals (KERX) ran from $3.43 to a high of $9.98. These two biotech companies ran on news. This shows investors are chasing these type of plays.

Analysis: Investors and traders must be alert and realize decent biotech news may cause a 100%+ move. Two to watch in the coming week are Rosetta Genomics Ltd. (USA) (ROSG) and Aastrom Biosciences, Inc. (ATQN.F).

All small cap stocks that are still low on the chart should be monitored, especially ones flush with cash and in the technology or biotechnology sector.

Understanding Small Caps and When They Will Run

Small cap stocks run at the end of major market moves. This happens as investors realize large and mid caps have run significantly and there are little gains left in that area. The rotation of capital begins in an attempt to find the next group of profitable stocks. Being the highest risk, small caps are the last to get money flow. However, being somewhat smaller, they can run 50-100% in days to weeks. This rotation is happening as we speak. Great gains to be had within the small cap arena.

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