Simple ‘first five days’ stock market indicator bodes well for 2021

A woman walks past the Charging Bull in New York, the United States, Dec. 21, 2020.
Wang Ying | Xinhua News Agency | Getty Images

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The stock market jumped to a record high during the first five trading days of 2021, and based on a classic Wall Street indicator, the early strength is a good omen for the full year.

The so-called "first five days" rule believes that if stocks perform well in the initial five sessions in a given year, the market is often up at the year-end, according to Stock Trader's Almanac, which studied the market phenomenon going back to 1950.

A simple rule like this is not something to base investment decisions on, but it should give investors a bit of comfort given its solid track record.

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