Forget the thermometer, in January you should check the barometer. According to Gary Kaminsky January sets the tone for the entire year.
The phenomenon is known as the January Barometer and it’s only been wrong 5 times since 1950.
How does it work?
"Traditionally January is a month of inflows into equity funds", explains veteran trader Gary Kaminsky. "That’s something you’ve got to watch."
This year you would look at the flows and ask yourself, “Is this the best the equity market can do?”
"It does have ramification on the way people think about putting money into stocks for the year," Kaminsky adds.
The statistics support Kaminsky's thesis.
If you take a look at the January Barometer for the past 113 years since the Dow started trading it’s been right 64% of the time, says host Melissa Lee.
Fast Money's Chairwoman Karen Finerman doesn’t buy it.
She thinks it's a fun fact, but not much more. "We’re in such extraordinary times you can’t extrapolate anything. Flow of funds change on a hair trigger," she counters.
Joe Terranova finds it tough to get on board, too. "If you played that theory last year you would have missed out on sharp gains in the equity market," he adds.
What do you think? We want to know!
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Trader disclosure: On January 29th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (IBM), (KFT), (MSFT), (WMT); Finerman's Firm And Finerman Own (RIG); Finerman's Firm Owns (PLCE); Seymour Owns (AAPL), (BA), (F), (INTC), (PBR); Terranova Owns (BAC), (JPM), (XOM), (HAL), (OIH), (FCX), (GOOG), (FMC), (AAPL), (DELL), (MSFT), (QCOM); Terranova Is Long March British Pound Futures; Terranova Owns (XLF) Feb. Calls; Terranova Is Short (AAPL) Feb. Calls
For Tim Seymour
Seygem Asset Management Is Short (VALE)
Seygem Asset Management Owns (POT)
Seygem Asset Management Owns (FCX) Calls
Seygem Asset Management Owns (PBR)
For Joe-Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)
For Brian Stutland
Stutland Owns (XOM)
Stutland Is Short (SPY) Directional Position, Long Volatility
Stutland Is Long VXX
Stutland's Firm Is A Market Maker In VIX And SPX
Stutland's Firm Is Short VIX Directional Position, Short Volatility
Stutland's Firm Is Short S&P 500 Directional Position, Short Time Spreads
Other Relevant Disclosures:
Seymour Owned (GOOG) On 1/21/10
Terranova Was Short Feb. Crude Oil Futures On 1/11/10
Finerman's Firm Owned (AXL), (AXL) Calls On 1/8/10
Kaminsky Was Short (QQQ) On 1/7/10
Terranova Was Short Feb. Crude Oil Futures On 1/11/10
Finerman's Firm Owned (TGT), (TJX) On 1/12/10
CNBC.com with wires
