The Week Ahead: The Good, the Bad, or the Ugly?

Focus: STRATEGIES

January was clearly a bullish month for stocks, and MoneyShow's Tom Aspray digs into previous years with hot starts to see what investors might expect in 2013. However, although this rally may have some room left, there may be more important considerations if you already have substantial gains.

After a record-breaking week, investors were closely watching Friday’s monthly jobs report to see if it would dampen the recent enthusiasm regarding the stock market. Instead, the report showed that job growth in 2012 was better than most thought, and the Dow Industrials and S&P 500 made new highs for the week and closed strong.

Clearly, stocks have gotten the public’s attention. Even the local TV channels have devoted more time to discussing the stock market. Many have focused on the January Barometer—historically when stocks are higher in January, it is a positive sign for the whole year.

A recent Wall Street Journal article reported that since 1929, a higher January close in the S&P 500 has resulted in an average 13% gain. This is in contrast to the average 3.6% loss in those years when stocks are lower in January.

Of course, within these averages there has been a wide range in performance, and we have seen the full gamut in the last 20 years. Let’s take a look at the good, the bad, and the truly ugly years, so we are better prepared for 2013.

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The performance in 2013 was the best since 1997, and we can all hope that this year turns out as well.