Friday, January 2, 2015

The January Barometer

Today is the first trading day of 2015, and it's also the beginning of the January trading period. There is a stock-market adage that says the whole year will go as January goes. If this month is an up month, the whole year should be up.

That's held up pretty well in the past. Since 1950, January has served as an accurate barometer for the remainder of the year 77 percent of the time. But be warned: One of those anomalies happened just last year. The S&P 500 dropped by about 3 percent in January, on its way to a 7 percent gain for the year.

Even more accurate as a barometer for the rest of the year are the first five days of January. The first five trading days of the year have predicted the direction of the market for the year as a whole a whopping 85 percent of the time.

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