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Year of the Horse not so hot for stocks

As China welcomes the Year of the Horse, investors may want to note that historically it hasn't been the friendliest for stocks.

China's Lunar New Year, or Spring Festival, begins Friday, marking the start of the year 4712.

Chinese folk artists perform during the opening ceremony of the Spring Festival Temple Fair on Thursday in Beijing.
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Chinese folk artists perform during the opening ceremony of the Spring Festival Temple Fair on Thursday in Beijing.

The Chinese New Year is symbolized by an animal from the zodiac calendar, rotating through a 12-year cycle. Last year, for example, was the Year of the Snake and 2012 was the Year of the Dragon.

Since 1928, Horse years have been cautiously optimistic for the S&P 500 and Dow, posting average annual returns of 2.41 percent and -0.09 percent, respectively.

In fact, the Year of the Horse ranks as the second-weakest year for both the Dow and the S&P.

In the past, the market performed the best during Years of the Pig—most recently celebrated in 2007, when the S&P 500 last reached a record high—while Years of the Snake have been the worst, last observed in 2013—although it turned out to be the best year in more than a decade.

The Year of the Horse arrives at an uncertain time for stocks.

"Transitions are increasing uncertainty, from the leadership handoff at the Fed, to the unwinding of the emerging market carry trade, to the eclipsing of the Lunar New Year from Snake to Horse," says Sam Stovall, chief equity strategist at S&P Capital IQ.

"Global investors are re-evaluating emerging market growth projections, incorporating reduced expectations from the Fragile Five (Brazil, India, Indonesia, South Africa and Turkey). While these factors add up to a more cautious investment environment, we believe a resulting pullback or correction will not derail this bull market, as we see the ongoing taper pointing to improving growth."

Below is a look at the historical performance based on the Chinese calendar.


—By CNBC's Giovanny Moreano and Pradip Sigdyal. Follow Giovanny on Twitter: @giovannymoreano

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