"January Effect" with stock market
 

I heard on CNBC today (12/30) the following commentary by one of the guests interviewed...re: the so-called January Effect:

1) The first 5 trading days of January has an 85% probability of predicting the gain vs. loss yearly status for the market.

2) For action the entire month of January, it sets a 76% yearly probability.

Disclosure: Notice I didn't say 100% predictability. So don't shoot the messenger.

Gene

:boom:
:boom:
:boom:

a report/forecast like that is akin to forecasting a year in advance how many hurricanes there will be next year.

Patterns can be useful looking backward in time....they are hardly a basis for forecasting and especially the stock market. It is going to go where ever the lead steers determine it is to go based on their gain opportunities at the time.

Makes for interesting reading....sometimes.

Sorry Gene but you're dreaming if you think they won't shoot the messenger on this board. :throwtomatoes:

But I applaud your courage for passing along the info. :BigApplause::BigApplause:

And now that I dipped my toe in, what specifically are they looking for in the 1st 5 trade days to determine? Are they saying the % gain/loss in those first 5 days will be near/same as it will be for the whole year?

Hard for anything to go down with the Fed printing $85,000,000,000 a month

I'm pretty sure this backward looking yearly anecdote is that the market direction will be the same, no correlation to magnitude.

BTW, I've seen 2 or 3 posts/threads about the market just in the past week. The beginning of the end of the bull if this continues.

The January Effect, by definition, could (I repeat...could) affect the market up OR down. So it is not, by inference, a "bullish" post on Dec. 30.

Gene

Where I live the January Effect means "Snow"!

Stats
 

Stats are always fun. Thanks for sharing.

I had always heard of the January Effect, but I had never seen the 85% and 76% probability numbers. Again -- I repeat -- these aren't 100% stats!

The first 5 "stock market" days of January conclude Jan. 8, 2014. Mark your calendar for this tracker. And then Jan. 31.

I'm not sure how this duo works, say, if the market has a Jan. 2-8 gain, but a loss for Jan. 2-31 (or vice versa). I would think the latter period would have more weight (since it spans a longer period). We'll see!

Gene

I thought the stats were fun..................stats:

Statistics is the study of the collection, organization, analysis, interpretation and presentation of data. Statistics is alternately described as a mathematical body of science that pertains to the collection, analysis, interpretation or explanation, and presentation of data,[5] or as a branch of mathematics[6] concerned with collecting and interpreting data. Because of its empirical roots and its focus on applications, statistics is typically considered a distinct mathematical science rather than as a branch of mathematics.[7][8] Some tasks a statistician may involve are less mathematical; for example, ensuring that data collection is undertaken in a way that produces valid conclusions, coding data, or reporting results in ways comprehensible to those who must use them.

I have always been a little suspicious that financial experts collude in order to manipulate their markets. For me I am always in an index frame of mind; albeit I do believe in rebalancing my portfolio annually

The market did well primarily because of the Fed which did nothing for main street nor retirees looking for fixed income vehicles.

I am taking the January Effect with a grain of salt (maybe a couple of grains).

The only thing I'm predicting for 2014 is the following:
"The Dow 30, S&P 500 and Nasdaq will all end the year either ahead or behind 2013."

Gene
...enjoying the Villages!

Haven't you heard its only $75 Billion now LOL. Keynesians are all in.

Goodbye
 

It's going to crash. Sell!!!

:cryin2::cryin2::cryin2:

It WAS $95 billion, I'd already accounted for the "taper". That's $300 for EVERY man, woman. and child in the country...every month!

The market went up after they reduced it to 75 billion.

That's because some $ amount of tapering was already factored into the Marketplace. Going from $85 bil to $75 bil. a month finally got the ball rolling. It was a small ball, and that's why the market digested it comfortably. Going to $65 bil. the first increment would have been a harder swallow!

That said, I heard Bob Pisani (on CNBC) say today he thinks the Fed. will end up actually increasing QE sometime in 2014. If that happens, look out below (in my opinion). That would mean we're addicted to QE; that we can't live without it.

Of course, Pisani is just one voice (he also predicted a 10% market correction sometime during 2014).

On the other hand, Jeremy Siegel said today he sees the Dow "ending" 2014 at 18,000. It ended today (12/31/13) at 16,575. That would be an 8.6% increase for 2014. He, too, said there would be a correction along the way.

One thing is for certain: 2014 won't be linear...several (many?) Ups and Downs along the way. Buckle in.

But first things first...let's see how January performs.

Gene

I question the experts optimism when it comes to 2014. Washington has not done enough to correct the flawed economy. and in fact exacerbate flaws with Dodd-Frank, ACA, QE which I believe will go back up in 2014. all this and more will keep the economy bogged done in banality

Or perhaps Washington has done too much, causing a flawed economy in need of correction.

I heard the same the same rationale regarding the Santa Claus Effect.

The truth is nobody knows what the stock market will do. Statistically, it goes up or down 33% of the time. It goes sideways 66% of the time. Reversion to the mean.

First 5 days 2014 results
 

Today (Jan. 8) marks the 5th trading day of 2014 (Jan. 2,3,6,7,8). Here are the 5-day stats:

* Dow 30.... -0.7% less than end-of-day Dec. 31

* SP 500..... -0.6% " " " " " " "

* Nasdaq..... -0.3% " " " " " " "

Thus, all 3 indexes show a (small) loss for the first 5 days of January. Draw your own conclusions, if any.

Gene

January stock market stats for major indexes
 

Today (Jan. 31) marks the final stock market trading day of January 2014. Here are the monthly stats for January:

* Dow 30.... -5.30% less than end-of-day Dec. 31, 2013

* SP 500..... -3.56% " " " " " " " " "

* Nasdaq..... -1.74% " " " " " " " " "

Thus, all 3 indexes show losses for the month of January. Draw your own conclusions, if any (same as I said for the first 5 trading days of January). I suggest you scroll up to the original post to see the nature of this thread.

Gene

It's only human nature to hope we found a way to predict the future but it will never happen. There are too many news events ahead of us that would change what's going to happen.

Future uncertain
 

:agree: You are exactly correct.

Are you selling or buying based on the information you provided?

I merely provided this year's January numbers for viewers to draw their own conclusions for the so-called "January Effect," which (as I stated) does NOT offer 100% probability. My original post displayed the probabilities that I heard on CNBC in late December 2013.

Investing is a personal decision, as you know. To answer your question, I won't be buying any "long" positions tomorrow (Feb. 3), based on reasons other than the "January Effect."

I neither accept nor reject the "January Effect." But others may...to each his/her own.

Gene

Actually Gene,the so - called "January effect" is something other than what you are describing. It has to do with folks taking tax losses in December, making stocks cheaper in January, primarily small cap stocks. This has less validity in recent years since a lot if stocks are held in 401k's.

I can't disagree with you. I used the phrase "January Effect" because that's how it was reported on CNBC. I think the commentator should have said "January Barometer." Because that's what he was describing (as goes January, so goes the remainder of the year), with the Probability numbers I reported in my original post. Substitute "January Barometer" in this thread, and we're talking about the CNBC story. Thank you for pointing out the misuse of "January Effect."

Gene

Today (3/31/2014) marks the end of Q1 2014. Here are the stats for the first 3-month period of the year:

* Dow 30 ....... (-0.72%)

* S&P 500 ...... +1.30%

* Nasdaq ........ +0.54%

Gene