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

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

(This story is for CNBC Pro subscribers only.)

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.

More In Pro Insight

CNBC ProMike Santoli's market notes: Growth stocks bounce, an unusual ETF for the upturn, the bull case
CNBC ProThese 'return to normalcy' stocks have further to run on an effective vaccine, Jefferies says
CNBC ProMike Santoli’s market notes: Traders scramble to chase the vaccine-fueled rally