The January / February Market Reaction .Historically

Statistical response to a DOWN January

A down January is a bad omen for the stock market. Yale Hirsch of the The Stock Traders Almanac suggests that since 1950, every down January in the S&P500 preceded a new or extended bear market, or in some cases, a flat market. They go on to further suggest that down January’s are followed by substantial declines averaging -13%

The Standard & Poor’s 500 Index has returned 24 percent on average in years it’s risen in both January and February, a bullish sign for 2013, according to S&P.

The S&P 500 climbed in both January and February 26 times since 1945, Sam Stovall, S&P’s New York-based chief equity strategist, wrote in a note. All 26 years ended with positive returns when including dividends, the data show.

The last two years have seen back-to-back gains in the first two months, leading the S&P 500 to a 16 percent advance in 2012 and a 2.1 percent rise in 2011, including dividends. The biggest advance when the index rose in January and February was the 52 percent rally in 1954. 2013 saw a nice 27% rise .