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Most investors are aware of the “January Effect,” a seasonal occurrence where the market tends to really rally in the first few months of a new year. This is because this is the time of year when institutional investors really get down to business with pension funding and other year-end trading events. This seasonal phenomenon creates a spike in volume and very favorable conditions on Wall Street.

I expect that this January bounce will be only the beginning of the surge we see on Wall Street in 2010. Easier year-over-year earnings during the fourth-quarter reporting season will cause a buying party in late January and February, and then improving economic indicators will build momentum for several months into the new year.

To help you capitalize on this seasonal strength, here are my Top 5 Stocks for January.

 

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