[MARKET ALERT]: What January’s Performance Means for Stocks in 2019
Dear Wealth Watch Reader,
Santa Claus rallied after all!
Recall in a previous post I pointed out the very strong seasonal tendency for stocks to rally between Christmas and New Year’s.
Specifically, over the last five days of December and the first two days of January since 1969, stocks have advanced nearly 80% of the time, posting average gains of 1.5%, according to the must-have Stock Trader’s Almanac.
Well, this year Santa delivered, with the S&P 500 up 1.3% over that stretch, despite nasty declines of 2.9% on Christmas Eve and 2.7% yesterday.
And the Dow’s thousand-point gain the day after Christmas and three out of five up days since then sealed the win for the bulls.
The next seasonal trend to be on watch for is the January Barometer and the First Five Days indicator. Again, both of these seasonal stock market trends are frequently featured in the Stock Trader’s Almanac.
First, “As January goes, so goes the year” is a time-honored Wall Street saying.
Sure enough, the data show that a stock market gain in January leads to an up year for stocks 75% of the time. But every down January since 1950 has led to extended losses for the market over the rest of the year, or at best a flat market.
Second, the first five days of the year are a sort of early-alert indicator for the January Barometer. If the S&P is up over that early new year period, the stock market goes on to post full-year gains over 80% of the time.
To me it’s no surprise that so far the first five days are off to a bad start, with the S&P down 2.4% over the first two trading days of 2019, but there’s still time.
Keep a watchful eye on the market’s directional trend through its close next Tuesday, Jan. 8, for the final verdict.
Fatigued investors could really use a positive showing right about now. A dismal December saw the Dow shed 2,200 points, or 8.7%, during the month, making it the worst December since the Great Depression in 1931.
And although most asset classes posted poor performance as 2018 ended, there were some notable exceptions.
One asset that glittered is gold, up 5% in the month of December.
Gold mining stocks performed even better. The Philadelphia Gold and Silver Index (XAU) is up nearly 10%.
Bottom line: Amid uncertainty and turmoil in the markets you have to love the glitter of gold and silver and the companies that mine these precious metals.
Need more proof?
XAU is already up another 2% so far this year, and I fully expect the uptrend in precious metals to continue well into 2019.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
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