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The Myth Of The January Indicator
Why won’t this idea go the way of the Super Bowl indicator, which has incorrectly predicted the market five of the last eight years thus lost its sex appeal? Because the track record of the first week and all of January are well above a coin toss. Up Januarys have correctly predicted the rest of the year will be higher 80% of the time. While that sounds impressive, it fails to impress when put in the context of any up month predicts the next 11 will be up 76% of the time and April, May and September are better predictors than January. Likewise the first week of the year correctly predicts the rest of the year 64.15% of the time. While this sounds impressive too, it is not so unique when you find out that any up week says the next 51 weeks will be higher 68.08% of the time.