January and February Effect

Discussion in 'Trading' started by chartie, Jan 4, 2007.

  1. chartie


    January Effect:

    According to Birinyi Associates, the so-called January effect has a 71.1% reliability from 1962 to 2006. But, the reliability is more accurate in up years than down years.

    When January is up for the month, the rest of the year also moves up 85.7% of the time. When January moves down (which has happened only eight times since 1962, by the way), the correlation with the rest of the year's direction is 47.1%.

    February Effect:

    James Altucher (author of <i>Trade Like a Hedge Fund </i>) - If the S&P 500 index is up in February, the remaining 10 months of the year are up an impressive 85% of the time. Specifically, there have been 27 occurrences of an up February since 1952, and on 23 of those occasions the market has been up for the final 10 months of the year. The failures were 1962, 1981, 1987 and 1990. In other words, it took the Cuban Missile Crisis, 20% interest rates, Black Monday and the invasion of Kuwait to derail the fabled February Effect.

    But if February is down, then the prospects are grim. Only 57% of the 26 occurrences resulted in an up final 10 months, and a down February has called all of the down years in the past 15: 1994 (down in the last 10 months), 2000, 2001 and 2002. January was up in 1994 and 2001.
  2. what happens if the market rallies from MAR - DEC? What is the statistical results for the year?

  3. Mvic