The January barometer is the hypothesis that stock market performance in January (particularly in the U.S.) predicts its performance for the rest of the year. So if the stock market rises in January, it is likely to continue to rise by the end of December. The January barometer was first mentioned by Yale Hirsch in 1972.
Historically, if the
S&P 500
The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...
goes up in January, the trend will follow for the rest of the year. Conversely if the S&P falls in January, then it will fall for the rest of the year. From 1950 till 1984 both positive and negative prediction had a certainty of about 70% and 90% respectively with 75% in total. After 1985 however, the negative predictive power had been reduced to 50%, or in other words, no predictive power at all.
[Christian Felde]
A deep dive into the January Barometer
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See also
*January effect
The January effect is a hypothesis that there is a seasonality, seasonal market anomaly, anomaly in the financial market where security (finance), securities' prices increase in the month of January more than in any other month. This calendar effec ...
*Super Bowl indicator The Super Bowl Indicator is a spurious correlation that says that the stock market's performance in a given year can be predicted based on the outcome of the Super Bowl of that year. It was "discovered" by Leonard Koppett in 1978 when he realized t ...
* Cabañuelas, analyzing the weather of January to predict the rest of the year. Part of Hispanic weather lore
Weather lore is the body of informal folklore related to the prediction of the weather and its greater meaning.
Much like regular folklore, weather lore is passed down through speech and writing from normal people without the use of external me ...
.
References
Business terms
Calendar effect
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