January was a strong month for stocks. Does that matter? The so-called ‘January barometer’ states that “as goes January, so goes the year”. There is “some truth” to it, says the Carson Group’s Ryan Detrick. Historically stocks have been much more likely to keep rising when they advanced in January compared to when they fell.
A very strong January, like in 2023, is “even better”, enjoying above-average gains. However, others have argued January is no more predictive than various other months.
In any event, investors must ask: why? What’s so special about January? Fidelity’s Tom Stevenson says the barometer idea might be self-reinforcing, with a strong January encouraging others to invest. Maybe. Then again maybe it’s just a statistical fluke. Don’t bet the farm on this one.