The stock market is full of strategies, and it seems there's a new strategy coming out every day. Some may argue that they are self-fulfilling prophecies, especially with limited backtesting. That said, some strategies have actually improved chances of success. Investors can leverage knowledge by applying it to their future trade ideas. For example, the "January Effect" is a seasonal trading strategy that expects stocks to rise in January, thanks to historical data indicating a positive investment inflow. These early leaders also help set the market's dynamics on what sector and stocks will lead the pack.
So, how do you find these leaders? The simplest way is to consider YTD performance. Doing so lets you see which stocks are leading and have the potential to be the market darlings in the first quarter. Once we have a shortlist, we can screen for other indicators to create our trade ideas. In this case, we will use the Analyst Recommendation to complement our initial filter, allowing us to combine the market’s and professionals' bets via their recommendations.
