NOTE: Every week I write a Client Note for my clients. For a limited time, I am allowing non-clients to sign up and receive the Client Note. You can sign up at the top right hand corner of the website. I will also be posting the notes on my blog with a 24-48 hour delay from time to time. Here is this week’s.
A weak January bodes ill for stocks the rest of the year. According to Ned Davis Research, in years when the Dow has risen in January, the median rise for the rest of the year is 10.4%. In years when the Dow has fallen, the median rise for the next 11 months is just 0.28%.– “Stocks Hit Worst Run Since Financial Crisis”, Tom Lauricella, The Wall Street Journal, January 29, A1
From Year Average
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Finally, the news has actually been strong. Earnings have been better than expected and recent GDP and ISM Manufacturing reports are the strongest since the beginning of 2003-2007 bull market. But the market won’t go higher. To me, this smells like a definite change of tone from the euphoria of last year. I don’t expect that kind of environment to return.