The January Barometer And The Presidential Cycle —
Should Investors Worry?
By Angel Clark, VectorVest, Inc.
Predicting where the stock market will be a year from now would be little more than a lucky guess, but the January Barometer is used by some to do just that. However, it’s also mocked by just as many.
The January Barometer is a theory that was initially postulated by Yale Hirsch in 1972. It’s about as simple as you can get – that the overall gain or loss of the S&P 500 during the month of January will set the stock market’s tone for the rest of the year. If the S&P ends January higher than the first trading day of the year, ‘barometer believers’ would expect the market (represented by the S&P) to generally trend higher for the rest of the year as well and vice versa if January ends in a loss.