This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Five Stocks for the Year-End Rally

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.

The screen produced over 100 names, which was whittled down to 78 when I added the short interest parameter (which required an additional screen and some manual checking). And because I want to buy calls, rather than the underlying shares, I was able to reduce the list somewhat to a more manageable 37 names by only considering stocks with exchange-traded options.

Using options will not only require less capital outlay and supply more leverage, but will also offer a limited risk equal to the cost of the call. In addition, given that current volatilities are trading at historically low levels, and since the time frame for the January-effect trade is very specific and short, the time erosion shouldn't be too severe as we will look to exit the trade on Jan. 7 or the first Friday of the month.

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,898.51 +93.71 0.53%
S&P 500 2,073.53 +2.88 0.14%
NASDAQ 4,778.7390 +13.3590 0.28%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs