January Effect 2013

Posted on March 1st, 2013

Although it may seem a little late talking about the effect January’s performance has on the market, the timing is right when looking at the combination of February. This year January was up 5% and February limped in with a gain of 1.1%. Historically speaking the market has been split on January’s performance since 1950. Not including this year, it was up 39 times and down 24 times. February has been up 34 times compared to down 29 times and March has outperformed both of those as it has been up 41 times and down only 22.
But what is interesting is the ripple effect that January has over February and March. Of the 39 times that January was up, February was up 25 times and down 14. Following through to March and of the 25 times that February was up AND January was up, March was up 18 times and down 7. The chart below illustrates this data.
On the flip side, you can see that when January is lower, there isn’t a clear trend of decline.
 
An even stronger trend is seen when we look at this effect over the rest of the year. Of the 39 times that January was up, the rest of the year pushed even higher 34 times. Said another way, 87% of the time when January is up for the month, February to December is also higher. 
Of course no is saying that it goes straight up from February to December, but as the long-term hedger knows, market timing is a hard game to master in so he/she looks for broader market trends. Perhaps this helps create a case on why 2013 can push even higher.


Posted in not categorized    Tagged with no tags


0 Comments


Leave a Comment