What can the first two months of the year tell us about what to expect in 2014 for the S&P 500 (NYSEARCA:SPY)? This article answers that question by looking at the historical monthly returns of January and February both separately and combined. In addition to these, a two-month return is calculated and the forecasting ability for the full-year is put under the microscope. The time period under study is 1950-2013 and data for the S&P 500 refer to Bloomberg ticker symbol SPX Index.
The common saying is “As January goes, so does the year”. (First identified by Yale Hirsch of the Stock Trader’s Almanac). How helpful is this saying? To achieve the full benefit of this, we need to dive into the numbers. Overall the January Barometer has been correct 76.6% of the time. That means when January is up, the year will be up and when January is down, the year will close down and this occurs almost 8 times in 10. If we break down the predictability to positive and negative Januaries then we see a different statistic. When January is up (40 times in the last 64 years), the year is up 90% (or 36 times).
To read the entire article go to: History Predicts The S&P 500 In 2014 Will Be …
