Will This January Set an Up or Down Year?

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By Jacob Maslow

Analysis of stock market graphs.
Analysis of stock market graphs

I don’t mean to sound superstitious, but if you are to look at the historical statistical performance of the Dow Jones Industrial Average, January is a statistically important month. Over the past 117 years, the market’s performance in January has accurately predicted the market’s outcome for 87 of those 117 years. These statistics are nothing to laugh at. It doesn’t matter whether you believe in superstition or not, but you can’t ignore this statistical correlation. Maybe it’s coincidence or maybe not, but the numbers don’t lie. A track record of 87 out of 117 is quite a track record. Baseball players can only dream of such a statistical performance.


When the Dow Jones Industrial Average sank in the month of January, its annual performance sank 60% of the time. Has there been recent exceptions? Yes, 2014 was one of the relatively rare exceptions to this pattern. In January 2014, the market sank but by the end of December, the market actually finished higher for the year.


Another key factor to walk away with is that in terms of prediction accuracy, January is more accurate when the stock market finished higher for the month compared to when it finished lower. There’s a higher chance that January will fail in predicting the overall fortune of the market by the end of the year when it finishes lower.

Considering the roller-coaster ride the market has been going through lately, all eyes are on whether the market will finish higher or lower. Considering the economic conditions in China, Japan, and Europe as well as the strong dollar and collapsing oil, it’s anyone’s guess. There are definitely enough negative indicators in play in the market to point to a weak or even disappointing finish for Dow Jones Industrial Average for the month of January.

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