Major Stock Market indicator Points to a Bullish 2020

Major Stock Market indicator Points to a Bullish 2020

One of the best stock market signals, according to the Stock Trader’s Almanac, has been the “first five days rule”. This says that the direction of stocks in the first 5 trading days of the year has a good track record of predicting stock market performance for the whole year.

When stocks finish higher in those 5 days, the S&P 500 and major indices has been positive 82% of the time at year-end with whopping average gain of 13.6%.

In a way it’s like Groundhog day (the pseudo holiday, not the movie).

Stocks did finish the first five trading days of 2020 higher, with the S&P 500 rising nearly 0.7%. So it appears Punxsutawney Phil did not see his shadow this year and spring should come early.

Of course, it had its bumps. U.S.-Iran tensions during the period spooked investors. However, the first five trading days were positive, which should be setting up for strong performance in the full year.

The next gauge to watch is the January indicator which says “so goes January, so goes the year”. This has worked 87% according to the Almanac.

The big test will be corporate earnings which begin to be announced late next week. I suspect that stocks will be slightly down ahead of earnings announcements, worried that they will not match expectations. However, I expect this to be another good earnings season, with a lot of positive surprises, which should push the market higher.

Positive as I may be, retirement investing requires proper risk management. We all want all of the upside of the market, but capturing as little of the downside as possible is equally if not more important at this stage of your life because you cannot replace this money.

For a free consultation on solidifying your retirement master plan and investing tactically, never buy-and-hope, so you can get the best returns with the least risk possible, give us a call today.

“Invest for need, not for greed!™”

Cheers -Keith

Smart Money Newsletter

Written By: Keith Springer

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