One January Effect candidate worth a look is Motricity ( MOTR), a provider of mobile data solutions and services that enable wireless carriers to deliver mobile data services to their subscribers. Motrictiy is the poster child for beaten-down stocks. It was trading as high as $23.09 in 2011 and now fetches just 90 cents a share. That's a total loss of 95% so far in 2011 for MOTR. This stock can't seem to stop going down. Shares of Motricity are printing new 52-week lows this morning as fund managers continue to dump this name due to its horrible performance in 2011. That said, this is one of the names that I think has the biggest upside if the January Effect takes holds since its one of the worst performers in 2011. My trading plan for MOTR is to get long this stock at the first sign of a decent up day when volume is tracking in near or above its three-month average action of 776,708 shares. This is going to mean you're buying MOTR near its lows since the bounce has to come from somewhere in a stock that continues to print new 52-week lows. Watch for a trading session when the stock is ticking up in early trading and the volume is heavy. Make sure to use a mental stop that's just below the 52-week low once we get some high-volume strength.
The bounce in MOTR could be huge, maybe even over 100%, since this stock is so beaten-down. This makes the risk-to-reward attractive for MOTR if we start to see any signs of life in this stock. This stock also has a huge short interest at 28.6% of the tradable float. A monster short squeeze could kick off if the hedge funds pounce on this name for a January Effect play.
Shares of Motricity (Nasdaq:MOTR) were gapping down Friday morning with an open price 16.7% lower than Thursday's closing price. The stock closed at $1.32 yesterday and opened today's trading at $1.10.