January sets the Tone for the Remainder of the Year

Don’t be. January tends to be a healthy month for equities.

January sets the tone for the Remainder of the Year

Below reveals how the S&P 500 (SPX) performs in January since 1979.

On average, you can expect a +1.06% gain in the first 31 days, jumpstarting the +10.35% average annual gain.

To track the S&P 500, you can use the SPDR S&P 500 ETF Trust (SPY) as the benchmark or Vanguard 500 Index Fund (VOO) as proxies:

This may not excite you. But there’s a bigger story inside this data.

January 2024 saw the S&P 500 jump +1.6%. Why is that important?

Whenever stocks are positive in January, market-beating returns are more common.

Using the same framework as above, whenever January is positive, stocks tend to outperform:

• The remaining months of February – December jump +10.97% vs. the normal gain of +8.95%
• Full year returns after positive Januarys offer market-beating returns of +15.7% vs. +10.35%

As I shared recently, we are heavily overbought and will likely see a healthy pullback. With this January barometer, it could be a great opportunity to pickup all-stocks at a discount heading into yearend.

S&P 500 Price Prediction

The S&P 500 closed out January with a gain. Since 1979, this is a very bullish omen for markets for the remainder of the year.

Full year returns offer a market-beating average of +15.7% vs. +10.35% otherwise.

History says don’t get too bearish. Any meaningful dip will likely be an opportunity for the bulls. Focus on the best quality stocks.

Disclosure: the author holds no position in SPY, or VOO at the time of publication.

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