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Is this January a Good Forecast for 2011?

With the current January proving better than last year, and the Dow & S&P logging more than 2%, would we expect to see a strong rest of the year? The Dow which closed up 2.7% posted its biggest January % gain in 14 years, and its first January advance in four years. The S&P was also a big winner as it jumped 2.3%, posting its best January % gain since 2006. Historically, January is typically one of the strongest months of the year and nearly 80% of the time that the month is positive, the markets rise for the the rest of the year as well.

S&P 500 Historical Averages (since 1928)

  • Avg January % change: +1.23%, up 64% of the time
  • Avg Feb-Dec % change: +5.93%
  • Avg Feb-Dec % change following a positive January: +8.5%
  • Avg Yearly % returns following a positive January: +12.91, up 81% of the time

Dow Historical Averages (since 1897)

  • Avg January % change: +0.96%, up 63% of the time
  • Avg Feb-Dec % change: +6.3%
  • Avg Feb-Dec % change following a positive Jan: +7.8%
  • Avg Yearly % returns following a positive January: +11.64%, up 81% of the time

Of course, a positive January not always make for a hopeful year. In 2001, for example, the S&P started the year up 3.5% but still finished the year down 13.04%. However, with the US stocks rallying on the first day of February with the Dow and S&P up 1.25% & 1.67%, respectively, the markets on average have seen gains over drops in February when on the first day of February the markets have closed up versus a down day. Perhaps historical averages make for a hopeful future.

S&P 500 Historical Averages (since 1927)

  • Avg Feb % change when 1st trading day in February is +: +0.34%, up 56% of the time
  • Avg Feb % change when 1st trading day in February is -: -1.3%, down 60% of the time

Dow Historical Averages (since 1897)

  • Avg Feb % change when 1st trading day in February is +: +0.33%, up 57% of the time
  • Avg Feb % change when 1st trading day in February is -: -1.06%, down 60% of the time

Comments? Send them to bythenumbers@cnbc.com

bythenumbers.cnbc.com

Symbol
Price
 
Change
%Change
DJIA
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S&P 500
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