Study: what happens when the stock market surges in January


The S&P 500 has surged nonstop since Trump’s election. The rally’s pace is accelerating. It surged 5.6% in January 2018 alone. Here are all the historical cases in which the S&P rose more than 5% in January, and what happened next.

  1. January 2013. The S&P gained 23.4% during the next 11 months.
  2. January 1997. The S&P gained 23.4% during the next 11 months.
  3. January 1989. The S&P gained 18.8% during the next 11 months.
  4. January 1987. The S&P fell -9.9% during the next 11 months. This was due to the crash of October 1987.
  5. January 1985. The S&P gained 17.6% during the next 11 months.
  6. January 1980. The S&P gained 17.9% during the next 11 months.
  7. January 1976. The S&P gained 6.5% during the next 11 months.
  8. January 1975. The S&P gained 17.2% during the next 11 months.
  9. January 1967. The S&P gained 11.4% during the next 11 months.
  10. January 1961. The S&P gained 15.8% during the next 11 months.
  11. January 1954. The S&P gained 38% during the next 11 months.
  12. January 1951. The S&P gained 9.7% during the next 11 months.

As you can see, a strong January is a bullish sign for the rest of the year. The 1987 case does not apply to today because the Medium-Long Term Model does not foresee a “significant correction” right now.
Here are all the historical cases in detail.

2013

The next 7.5% “small correction” began 3.5 months later in May 2013.

1997

The next 10.2% “small correction” began less than 3 weeks later in February.

1989

The next 9.2% “small correction” began more than 9 months later in October.

1987

The next 9.2% “small correction” began more than 2 months later in April.

1985

The next 8.4% “small correction” began 5.5 months later in July.

1980

The next 21.6% “significant correction” began 2 weeks later. This historical case does not apply to today because the Medium-Long Term Model does not foresee an imminent “significant correction”.

1976

The next 6.3% “small correction” began 2 months later in April.

1975

The next 8.5% “small correction” began 1.5 months later in March.

1967

The next 8.4% “small correction” began more than 3 months later in May.

1961

The next 29.3% “significant correction” began 10.5 months later in December. This historical case doesn’t apply to today because the Medium-Long Term Model doesn’t foresee a significant correction.

1954

The next 6.8% small correction” began more than 1 year later in March 1955.

1951

The next 8.1% “small correction” began 3 months later in May.

Conclusion

We can draw 2 conclusions from this study:

  1. The U.S. stock market will most likely go up throughout the rest of 2018. There will be 6%+ “small corrections” along the way, but December will probably close higher than January by a significant %.
  2. The next “small correction” is not imminent. At least 2-3 weeks away.

3 comments add yours

  1. Thank you Troy for your insight every day . As many times i find that asking a right question is harder than finding the answer . How about if you can sometime give us some “exercise question” but do not give the answer and we need to dig in data and find it out . We can send answer to you and you can post as a guess post ?

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