Over the past several weeks, stocks that have underperformed in 2016, were getting hit even harder due to tax-loss selling. Short sellers also hit certain stocks hard and many of them could be eager to cover their positions in early 2017, since that means they can put off paying taxes for another year and also probably pay less tax under a Trump Administration. These tax related factors are quite predictable and therefore it makes sense to look for stocks that could rebound in January since tax-loss selling is over, as well as to look for stocks that could see a potential short covering rally in the New Year.
