As the opening month of the New Year, January is host to many important events, indicators, and recurring market patterns. The month’s overall gain or loss, though, triggers something called the January Barometer. This states that the movement of the S&P 500 during January sets the stock market’s direction for the entire year. January’s direction has correctly forecasted the major trend for the market in most of the subsequent years.
Stocks used to rise on the day before holidays and sell off the day after, but now each holiday moves to its own rhythm.
Markets, sectors, and even individual stocks have shown a tendency to post annual highs and lows around the same time every year. This cycle is known as market seasonality.
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