Top Nav

The January Barometer: Why Stocks Should Rise this Year

Ian Wyatt

Barring a complete disaster in the next two trading days, January will be a decidedly “up” month for the stock market. And that bodes well for the rest of the year.

A phenomenon called the “January Barometer”, the brainchild of Stock Trader’s Almanac editor Yale Hirsch, states that “as the S&P 500 goes in January, so goes the year.” Right now the S&P is up 90 points this month. Nothing short of another Wall Street hurricane will prevent the index from having a positive month.

The January Barometer is a remarkably accurate market predictor, with an 88.7% success rate since 1950. Only seven times in the past 63 years has the January Barometer gotten it wrong. In a way, it’s a distant cousin to the so-called Super Bowl Stock Market Predictor theory.

Just last year, in fact, the Barometer was dead on. Stocks rose 4.4% in January, and 13.5% for the year.

There have been some recent exceptions, however. In 2010, a 3.7% loss in January became a distant memory after the S&P rose 12.8% that year. 2009 was even more inaccurate, with stocks plummeting 8.6% in January before recovering to finish up 23.5% that year.

So the recent track record for the January Barometer isn’t great. Still, it’s an interesting – if not entirely useful – tidbit that reveals a strong correlation between the year’s first month and the year itself.

Income and Prosperity Offer

Income & Prosperity is designed to help you seek out the safest income opportunities and discover an entire world of dividend investments. This free newsletter has a laser-like focus on one issue and one issue only: how can investors near or in retirement generate more income. Each day, you'll receive our best investment idea - skewed towards safe income - but also including lesser known opportunities to grow your wealth while keeping it out of harm's way.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.