January Indicator

Discussion in 'Trading' started by waggie945, Jan 23, 2004.

  1. If January is up, the year is up, and as we all know this has been a pretty darn good indicator . . . In fact, in the past 80 years it was correct in 38 out of 49 signals.

    The recent years in which this indicator failed were:

    2003 Jan (-2.7%) Entire Year +26.4%

    2001 Jan (+3.5%) Entire Year -13.0%

    1994 Jan (+3.3%) Entire Year -1.5%

    1992 Jan (-2.0%) Entire Year +4.4%

    1984 Jan (-0.9%) Entire Year +1.4%

    Year to date the SPX is +3.21% as of yesterday.
    If the market closes out January ABOVE 1108, then the January indicator will be Bullish.

  2. may be a lack of date ? what about 1995/96/97/98/99/00 ?

    over 80 years you said but 38 over 49

    so 80 - 49 = 31 year are missing so that could widely influence the standard deviation.

    But the Idea is interessant

    In Feb or March, market use to be bearish and according to all these comment in this Chat Room, S&P looks toppy. Would it means that Feb will be bearish. That my point of view
  3. I think you'd infer that 31 years January was a down month (and thus not a "January effect" signal), not that he skipped 31 years of data.

    So 49 out of the last 80 years January ended up and of those 49, 38 years ended up. Not bad, not great (especially if you factor out multiyear bull markets in that time period where the "January effect" isn't an "effect").

    Now - the logical question is, of the 31 years where January ended down, how many of those years ended up?????
  4. gnome


    Years back, I read somebody's research on January....
    1. If January was down, 50-50 year would be up.
    2. I January was Up, High correlation of up year... HOWEVER, if January's gain were eliminated from the calculation, average gain in the up years was small.... from Feb-Dec.

    In other words, most of the gain was in January. Those who waited for confirmation of the "January Indicator" already missed most of the year's gains.
  5. => that was my question, indeed.
  6. So, to go further, the question could be : Does January performance in Stock has an bigger impact on the year performance ?