Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Forecast for 2013, The January Effect

Stock-Markets / Stock Markets 2013 Jan 18, 2013 - 07:38 AM GMT

By: Investment_U

Stock-Markets

Matthew Carr writes: Can we know where the market is headed before the year even gets underway?

That’s always the question, isn’t it?

At the start of the year, there’re all kinds of predictions about where the market is going to head. All the big, bold predictions come out. And we’ll see articles that discuss indicators like “Where January goes, the market follows…”


But that’s hogwash.

If we look at the S&P 500′s returns going back to 2000, this trend “Where January goes, the market follows…” buckles.

For example, since 2000, January has yielded negative returns for the S&P seven out of 13 years… January is the start of earnings season, and it’s typically volatile because of that.

But during that same span, the S&P itself has had negative full-year returns only four times… Three of those when the month of January ended in the red.

To summarize, looking at the entire month of January is a misdirected indicator for how the market will do the rest of the year.

Finding a More Dependable Indicator
But there’s another January trend indicator that’s a lot more successful. And it looks at a much smaller period of time… just five trading days.

The “first five days of January” indicator was the brainchild of Yale Hirsch back in the early 1970s. It was hailed as an early warning system.

The idea is fairly straightforward: Those first five days give you a barometer of investor sentiment. And this can show you where the market is likely heading over the next year.

Admittedly, I’ve been intrigued by this indicator…

But instead of just blindly following “If the first five days of January are positive, then the rest of the year will be positive, too…” I’ve found you get a clearer picture if you only look at two thresholds. The rest are sort of neutral – akin to a shoulder shrug.

If we just look at a small sample going back to 2000, we can see it’s fairly accurate.

When the first five trading days in January on the S&P 500 yielded a gain of 1.73% or higher, the S&P returned double-digit gains for the year four out of five times. The fifth was a return of 8.99%.

Year First Five Days of January Return Full-Year Return
2012 1.73% 13.29%
2010 2.55% 12.64%
2006 3.35% 13.62%
2004 1.80% 8.99%
2003 3.42% 26.38%

In the last 13 years, the S&P has returned double-digit full-year gains five times. And this indicator predicted it right in four.

Now, on the other hand, if those first five days return a loss of -1.8% or larger, the S&P ended the year with a double-digit loss three out of four times.

Year First Five Days of January Return Full-Year Return
2008 -5.30% -38.47%
2005 -2.12% 3.00%
2001 -1.85% -13.04%
2000 -1.89% -10.14%

The S&P has returned full-year double-digit losses four times in the last 13 years. And this indicator predicted it right three of those times.

So, this year, the S&P returned a gain of 2.17% during the first five trading days. Going all the way back to 1950, if the first five trading days of January returned a gain of 2% or more, the market ended the year positive. Better yet, only twice did it not result in double-digit returns…

One more reason to be bullish on stocks in 2013.

Good Investing,

Matthew

Source : http://www.investmentu.com/2013/January/stock-market-forecast-for-2013.html

by , Investment U Research

http://www.investmentu.com

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules