The market as measured by the S&P 500 finished the month ahead +4.4%. Since 1950 there have been 18 Januarys in which the S&P 500 gained in excess of 4%, as it did this year. The S&P posted gains for the rest of the year on 17 out of the 18 occasions. The only failure was 1987 when the S&P gained 13.2% in January but ended up losing -9.8% between February and the end of the year. The last time there was a 4% plus January was in 1999 and the S&P 500 gained another 14.8% over the next 11 months.
Whether history will repeat remains to be seen, but there is no denying the prior history of 4% plus Januarys has been remarkable. Another positive today by our interpretation, was a “Golden Cross” buy signal. A buy signal is generated when the 50 day moving average of the S&P 500 closes above its 200 day moving average. There have been 5 previous “Golden Cross” buy signals since 2003. All of them were successful with the S&P 500 gaining an average of 8.6%, 12.9%, and 17.1% over the next 3, 6, and 9 months.