Monthly Archives: February 2014

2014 Should Defy the January Barometer effect…to the Upside

The “January Barometer” indicator/effect is the hypothesis that stock market performance in January (particularly in the U.S.) predicts its performance for the rest of the year. There is much debate surrounding the accuracy of this indicator though. For example, the Stock Trader’s Almanac suggests that dating back to 1950, the January Barometer indicator has about a 75 percent accuracy rate while a recent article in Bloomberg/Businessweek entitled, “Investors Looking for a ‘January Effect’ Should Wait a Few Months”, studied more than 85 years’ worth of data on the S&P 500 index and concluded that the returns for the month of January correlated to the annual returns of the stock market (as measured by the S&P 500 index) just 0.30% of the time. To this end, the January Barometer was also disproven as recently as the calendar years of 2009 and 2010. In both years, the S&P 500 index finished lower for the month of January but higher for the overall year.Read more