With the S&P 500 scraping out a 1.8% gain to kick off 2017 (the index’s first January gain since 2013), followers of this fortune-telling phenomenon are likely cheering the prospects of a prosperous year ahead. But do simple rules of thumb such as this, which are particularly alluring to fall back on during political and policy uncertainty, really work?
Are January’s Gains a Good Omen?
According to a well-recited traders’ omen, “As January goes, so goes the year.” The so-called January Barometer, as first mentioned by Yale Hirsch of the Stock Trader’s Almanac, suggests the performance of stocks in the first month of the calendar year dictates where prices will head for the year overall.
