S&P 500 & Nasdaq Analysis and Trends

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Up January vs. Down January Beats All Months
By: Almanac Trader | February 2, 2024



• Largest Improvement over next 11 months and next 12 months
• Next 11 months after Up January: +11.6%
• Next 11 month after Down January: +1.2%

Up January has much more outperformance versus when it’s down than any other month in the year on the following 11-months or 12-months return. Since 1938, when the S&P 500 was up in January the next 11-months average a gain of 11.6%. When January is down, the next 11-months average plummets to just 1.2%. Years with a positive January have historically outperformed a down January by 10.4%. Over the following 12 months, the outperformance grows to 11.2%. No other month comes close to these levels.

Hallelujah! The January Barometer is positive.



S&P 500 was up 1.6% this January which avoids the historically worst combination for the January Indicator Trifecta where all three are negative. Devised by Yale Hirsch in 1972, the January Barometer has registered 12 major errors since 1950 for an 83.8% accuracy ratio. This indicator adheres to propensity that as the S&P 500 goes in January, so goes the year. Of the 12 major errors, nine have occurred since 2001. Including the eight flat years yields a .730 batting average.

Our January Indicator Trifecta combines the Santa Claus Rally (SCR), the First Five Days Early Warning System (FFD) and our full-month January Barometer (JB). The predicative power of the three is considerably greater than any of them alone; we have been rather impressed by its forecasting prowess. It was certainly on the mark last year when all three were positive and S&P 500 gained 24.2%. However, this year is just the fourth time that the SCR and FFD were down, and the JB was positive.

As you can see from the table above, a positive JB has significantly improved the performance over the next 11 months and for the full year compared to when all three January indicators were down. In the prior three years when the SCR and FFD were down, but the JB was positive, next 11-month and full year gains averaged 15.1% and 19.9% respectively. This compares quite favorably to when all three January indicators were down as the next 11-months averaged just 0.2% and full year averaged a loss of 3.6%.

All Election Years Up When January Barometer Up



S&P 500 gained 1.6% in January and thus our January Barometer is positive for 2024. Full years followed January’s direction in 12 of the last 18 presidential election years. But 9 Election Years since 1950 with an up January Barometer are up 100% of the time with an average 15.6% S&P 500 gain.

JB is not a stand-alone indicator. Use in conjunction with other data and indicators to confirm or question your assessment of the market. Since 1938 when JB was positive, full year was positive 86.5% of the time & when it’s down the year was up 44.1% of the time. Every down January since 1950 was followed by a new or continuing bear market, a 10% correction or a flat year. Down Januarys were followed by substantial declines averaging -13.3%. See page 24 in the 2024 Stock Trader’s Almanac.

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