Can you believe it’s already February? Time flies when you’re having fun. Or as frogs say, “times fun when you’re having flies.”
We weren’t even a month into the new year and fear mongering has already transpired. Over the past 10-15 years, we’ve all died of Ebola, Mad Cow, SARS, Bird Flu, and now of course Coronavirus. The spooked markets have since recovered and most indices have made new all-time highs. The big question is, “what can we expect in the stock market for 2020?”
No one really knows the answer. However, if you’d like a few tidbits to keep in your back pocket for cocktail parties or cooler talk – here are a few according to the “Stock Trader’s Almanac.”
- Every down January on the S&P 500 since 1950, without exception, preceded a new or extended bear market, a flat market, or a 10% correction. The S&P closed January at 3225.52, down from the December 2019 close of 3230.78.
- The last 44 times the S&P posted a positive gain during the first five trading days of the year, the index posted gains for the full year 36 times (81.8% accuracy). The S&P 500 was positive for the first five trading days in 2020.
- In the last 17 presidential election years, the S&P followed the direction of the first five days in 14 of those years. 2020 is an election year and as stated above the S&P was positive for the first five days.
As you can see, you are able to find support for bullish or bearish stances. One thing I’d like to remind you is that on average you’ll see a 5% market decline around four times per year and a 10% decline once per year. This stat looks at all years historically, regardless of whether the full year was up or down.