January’s first trading days predict the stock market’s year — or so they say

Core Viewpoint - The stock market's performance at the beginning of January does not reliably predict its full-year direction, with historical data showing that the odds of rising remain consistent regardless of early January performance [2][4][5]. Group 1: Historical Context - The concept of the stock market's early January performance predicting annual trends dates back to at least 1972, when Yale Hirsch introduced the idea that poor performance during this period could indicate a bear market [2][3]. - Various analysts have identified different patterns, such as the performance on the first trading day, the first two days, or the entire first week of January as indicators of the year's market direction [3]. Group 2: Statistical Analysis - Analysis of the Dow Jones Industrial Average since its inception in 1896 reveals that none of the early January performance patterns meet traditional statistical significance criteria, indicating that these patterns are not reliable [4]. - The average stock market performance shows that it rises in approximately two out of every three years, and this probability remains unchanged by early January trading results [5].