THE FIRST 10 DAYS

Looking at data back to 1962, if the SPX closes higher after the first 10 days’ trading in January then historically there has been an 82% probability (23 of 28 iterations) that the index would work its way to a still-higher close at year-end. And the overall average gain beyond that mid-Jan close has been 10%. The average mid-Jan to year-end gain in the years that continued higher was 14.5%. The average loss in the down years was 10.8%.

Conversely, if the first 10 trading days of January lead the SPX to a close that’s lower than the end of the prior year, then the odds have been just 56% (9 of 16 iterations) that the index would work its way higher at year-end, with an average gain of just 3%. After a down mid-January close, however, the years that rebounded to higher year-end closes showed an average +16.4% mid-Jan to year-end rally while the years that closed lower than the mid-January close averaged a 12.8% decline.

So, if the first 2 trading weeks of this year generate a positive trend, then there’s a very high probability that the balance of the year will be pretty strongly positive. If the first 2 weeks of trade generate a negative trend, then it’s basically a crap-shoot as to whether the year will show a net positive or negative trend.