“There is nothing new in the world except the history you do not know.” Harry S. Truman

Well, well, well, isn’t this nice? Stocks have come out swinging in 2023, and we are looking at a very solid first month of the year. The next question is, does a good January mean much for the rest of the year? It turns out it very well could.

Widely known as the January Barometer, it looks at how January does and what could happen in the next 11 months. It is known by the saying, ‘So goes January, goes the year’ in the media. The late Yale Hirsch of Almanac Trader 1972 discovered this indicator. Today it is carried on by Yale’s son Jeff. I’ve known Jeff for years, and I must say, he is great, and I believe the work they do is some of the best in terms of seasonality, etc.

Let’s look at the January Barometer. For starters, last year saw stocks lower during the first month of the year, and we all know how that went. But it turns out there is no doubt some validity to how the first month does relative to the rest of the year. Moreover, as Truman noted above, history could give clues to what could be next.

Historically speaking, when the first month is positive for stocks, the rest of the year is up nearly 12% on average and higher 86% of the time. And when that first month is lower? It is up about 2% on average and higher 60% of the time. Compare this with your average year’s final 11 months, up 7.8% and higher 75.3% of the time. Lastly, a big first month (>5%) is even better, up 14.2% in the final 11 months and higher nearly 86% of the time. This matters, as the S&P 500 has a shot at being up 5% when this month is over.

Taking this a step further, here’s something I call a bullish slingshot. When the S&P 500 was lower the year before (check that box for 2022), but stocks gained more than 5% in January, very good things tended to happen next. This rare bullish signal only triggered five times (with 2023 having a chance at number six), and the full year has never been lower, up close to 30% on average.

Let’s be clear, we aren’t looking for a 30% rally in stocks, but once again, this is something we wouldn’t ignore.

Overall, to see January strong is a nice change and a potentially good sign. At the Carson Investment Research team, we’ve been on record for several months, predicting that October was indeed the end of the bear market. With small caps leading, high-beta names leading, and other global stock markets participating, we continue to expect higher prices in 2023 and don’t think we’ll make new lows for stocks.

Now for fun, the Year of the Rabbit just started. Take note, in no way should you ever invest in the Signs of the Zodiac, but this is an entertaining one to share. It turns out that stocks gain 10.6% on average during the Year of the Rabbit and are higher 83.3% of the time. So, again, please don’t invest in this, but hey, we’ll take it after last year!

Lastly, I joined my friend Dom Chu on CNBC’s Worldwide Exchange yesterday to discuss January and more. You can watch the full interview here. And no, I didn’t talk about the Bengals and all the missed calls by the Zebras!


Past performance is not an indication or guarantee of future results.

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