There's an old saw called the January Indicator, which holds that the direction the stock market takes in January will be the direction it moves over the course of the entire year. It sounds like a bit of market legend, but the Wall Street Journal looked into the idea, and found that it holds up. In 82 of the past 112 years, where the Dow Jones Industrial Average went in January was also where it went over the entire year.
Ah, but isn't that statistic a bit loaded? After all, January makes up part of the subsequent year, so it will influence the overall results. So the Journal looked at the following 11 months apart form January's return, and found that the January Indicator still held up in 70 of the 112 years.
What's more remarkable is that no other month shows as strong an effect. The only month that came close to predicting the direction of the following 11 months was November, which correctly forecast the subsequent year in 69 out of the 112 years. Most of the rest of the months were at 60 or fewer.
No comments:
Post a Comment