The January Trifecta

• Santa failed to show to Broad and Wall.

• But we have two more chances for a tailwind in 2024.

• No reason for concern at this time.

Santa Failed to Come to Broad and Wall

Dammit, Santa!

A couple of weeks ago I called attention to the The Santa Claus Rally. As the adage goes, “If Santa Claus should fail to call, Bears may come to Broad and Wall.”

Welp, he didn’t call. Or maybe he did and just brought us all coal instead as evidenced by coal stocks ripping higher into the new year. (See $ARCH, $METC, $AMR, and $HCC)

So does that mean that you should flip out, sell everything, and head to the bunker? Of course not. Don’t be silly.

The good news is that there are actually three other indicators to pay attention to in the month of January. Two of them are January’s First Five Days, and The January Barometer.

Together, these three indicators are known as The January Indicator Trifecta.

Like The Santa Claus Rally, these indicators come to us via Stock Trader’s Almanac.

January’s First Five Days

When the S&P500 is positive the first five trading days of the year, it has ended the year positive 83% of the time since 1976.

That means for 2024 you want to see the S&P500 closing price on Monday, January 8th above 4745.20 which was the opening price of Tuesday, January 2nd.

The January Barometer

Discovered by the founder of Stock Trader’s Almanac in 1972, Yale Hirsch, the January Barometer states that “As January goes, so goes the rest of the year.” As with The Santa Claus Rally and January’s First Five Days, the January Barometer has an impressive track record of being accurate over 83% of the time since 1950.

Again, the price to beat at the closing bell on Wednesday, January 31st is 4745.20.

January Indicator Trifecta

Together, the three indicators make up what is known as the January Indicator Trifecta. When all three metrics are positive, the S&P500 went on to put in a positive year 90% of the time.

While those are some damn good odds, we unfortunately don’t get them in 2024 and therefore will have to work a little bit harder this year. Not totally unexpected as markets are now in the whipsaw period caused by the pandemic response around the world. Which makes sense as no one in their right mind would think that world commerce could be shut down, massive amounts of currency created and then wiped out, supply chains disrupted, forcibly change the way humans behave, and expect for world economies to function “normally” within a few short years.

Screw Santa, I’m Still Optimistic

While Santa didn’t deliver the way we hoped, as of now it appears to simply be a garden variety retracement in markets. Which is healthy, and quite honestly after the previous several weeks, warranted.

However, if the S&P500 is not positive for the year come the closing bell on Monday, January 8th AND Tuesday, January 31st, then it might be time to prepare that bunker.

We will deal with that IF it happens. For now, my bet is still on growth.

Learn. Improve. Pass on.

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