Play The January Effect With These Small-Cap ETFs

We're less than 10 days from the start of January and that means it time to start forecasting the odds of a real January Effect. The January Effect is defined as a run up in stocks, often following a down December. Obviously, this doesn't happen every January, but the first month of the year is often pivotal in determining the outcome for stocks for the entire year so it's safe to say the bulls would like to see a legitimate January Effect start here in a few days. It should also be noted that a real January Effect is often lead by small-caps. One analyst said since 1926, small-cap stocks have beaten large caps 76% of the time in January, according to Barron's. Of course, there is some debate about whether or not we'll see a January Effect in 2012. Jeffrey Hirsch, editor of the "Stock Trader's Almanac," recently told Bloomberg News sees a small-cap led January Effect next year. Bank of America, on the other hand, doesn't agree. So maybe small-caps will rise next month. Maybe they won't, but let's get in holiday spirit and assume they will by looking at the following ETFs. PowerShares S&P SmallCap Energy ETF

: Considering that small-caps have been hit hard for most of 2011 and energy names have tumbled in recent months, the PowerShares S&P SmallCap Energy ETF has held up very nicely by jumping more than 4% year-to-date. An old winner from the

, PSCE looks good above $36. Not to mention, the ETF is home to a few takeover targets and those companies could be acquired next year, fueling a run back to the mid-40s for PSCE. PowerShares S&P Consumer Staples Small-Cap ETF

: We've spent plenty of time discussing the

. Well, it could easily continue in 2012 with Europe's sovereign debt crisis nowhere near being fixed and a presidential election looming in the U.S. Definitely an under the radar play, PSCC has just $20.3 million in assets under management. That means a lot of investors have missed out on the ETF's 6% rise this year. Schwab U.S. Small-Cap ETF

: There's not a lot of difference between the Schwab U.S. Small-Cap ETF, SPDR S&P 600 Small Cap ETF

, the iShares S&P SmallCap 600 Index Fund

and the Vanguard Small Cap ETF

, but there are two things to note before getting involved with SCHA. First, it has the lowest expense ratio of the aforementioned quartet. Second, it has been the worst performer of the group in 2011. Things to ponder... Vanguard Small Cap Growth ETF

: For those willing to be really bullish on small-caps, a growth ETF is the way to go and the Vanguard Small Cap Growth ETF is the one to do it with. Home to almost 1,000 stocks, VBK has a scant expense ratio of just 0.12% and it's performance this year has been decent considering small-caps and growth have basically been off the table. VBK has started to perk up recently, perhaps indicating it's primed for a January Effect of its own.