The Tell: How the Dow performs in January is more important than you know
SAN FRANCISCO (MarketWatch) — With three more trading days remaining in January and the Dow Jones Industrial Average down roughly 2% year to date, it’s still uncertain whether the index will muster enough of a rebound to close out the month in positive territory.
But how the blue chip index performs in January may have a greater bearing on the direction of the Dow DJIA, -1.01% for the remainder of the year than expected, according to the number crunchers from The Wall Street Journal market data group.
— January’s performance has predicted the outcome of the full year in 87 of 117 years.
— When the Dow fell in January, it closed out the year lower 60% of the time. 2014 was among the exceptions as the index fell in the first month but finished the full year higher.
— January as a predictor is more reliable when it is an “up” month, with the Dow finishing higher for the year 82% of the time when it ends January in the green.
— In eight of the past 11 years, the Dow repeated its January trend for the year.
The data covers 117 years, except 1914 which was excluded due to a significant changes in components of the index.