As goes January...

On January 10 I wrote a piece based on the statistic that if the S&P500 rises in the first five trading sessions of the years it, will end the year higher.

This so called 5 day rule had a success rate of 80%. Now, I came across another factoid for us from lplresearch based on the saying for US stocks that, 'As goes January, so goes the year'. The fact is that a good January signals a good year more often than not.

So, the example given was that when the S&P500 has been up in January, the final 11 months of the year have been up 11.7% on average. This is an outperformance of the usual average return of 7.6% for the remaining 11 months of the year. By contrast, when January finished in the red for the S&P 500 the average increase of the S&P 500 was only +1.2% on average.

The fact of further interest was that the January return factor was enhanced when January increased by more than 7%. In the six January's where the return was more than 7% the average gain for the rest of the year was 10.3%. Have a look at their table below.


The S&P500 is currently at 2752.88 and the Fed is dialing back hikes this could mean great news for stocks (as long as US companies earnings remain strong). However, the poor retails sales potentially throws a spanner into that works, we will have to see more data to decide. 10 year yields took a hit on the retail sales data too. This is obviously not a trade for most if us folk here, but nice to know for the kids/spouse/loved ones investments ;-). Why make things more complicated than they have to be.

Have a good weekend one and all . Yesterday's GBPUSD short has come off to the downside. I moved to BE to avoid the Parliament vote stress at 1.2846. I'll not hold over the weekend, as the weekend risk for a deal being struck is ,although unlikely at present, still possible.