The power and speed of the recent rally -- certainly including today -- is likely the result of money managers, having looked at flat returns for the bulk of the year, chasing prices somewhat indiscriminately higher as they look to bolster year-end performance. There is no reason to expect this run will end at a particular price level or prematurely just because it started earlier than the "traditional" year-end rally. The best stocks to pile into and drive higher are small-caps, which already have momentum in their favor and short-sellers on the run.
Rather than the broad market play of buying into the Russell 2000 or its ETF, the Russell 2000 iShares (IWM), I'm looking to really give myself over to this parabolic move and try to ride the best performers right through New Year's celebration.
I ran a simple screen for stocks with a market capitalization between $500 million and $1 billion that have gained more than 50% for the year and have shown a double-digit percentage increase in the short position. I also set the range of daily minimum volume between 100,000 and 1 million to eliminate some of the names that are just too illiquid for money managers to have a meaningful stake, or those in which it would take an unusual commitment to drive the price higher.