It’s another good start to a month as the market rings in the New Year with a strong 1% gain today.
Up to Start the Month
The markets have had a really nice run of doing well on the first day of the month.
Including today, the S&P is now up on the first day of the month in each of the last 6 months. Four of those times saw gains of 1% or more as well (August 2 up 2.20%, September 1 up 2.95%, December 1 up 2.16%, today up 1.09%).
Going back further, the S&P is up on the first day of the month in 13 out of the last 15 months (the exceptions being June & July 2010).
Since the S&P hit its lows in March 2009, the index has been up on the first trading day of the month in 18 of the last 22 months (the exceptions being June & July 2010, September & October 2009).
UP to Start the Year
Today’s rally may also bode well for a gain in 2011 – if recent trends hold.
When the S&P is up or down more than 1% on the first day of the year, there has been a strong correlation between the first day of the year and the year's change only in recent years.
Since 2000, the S&P 500 has moved up or down 1 percent on the first day of the year six times. Each time that has happened, that day's gain or loss has had a perfect positive correlation to the market's direction that year. (When the S&P 500 has been up more than 1 percent on the first day of January, the index finished the year in positive territory, and vice versa).
Between 1992 and 2000 (inclusive), there weren't any years when the S&P rose or fell 1% or more on the first day of trading for the year.
Before 1992, the correlation between the first day change and the year's change wasn't nearly as strong as it has been recently. From 1951-1991, during the 14 times the S&P had a 1%+ gain/loss on the first day of the year, there was only a positive correlation during 7 of those years.