Market timing Archives

During and after a 10 percent stock market correction, it is natural to ask whether the correction will deepen or not. We are wired for fight or flight and about twice as sensitive to losses as gains. Those more prone to act on instinct are vulnerable to selling stocks. This can result in missed gains during the ensuing years.

Reviewing past corrections, and the gains that follow, can help short-circuit those instincts.

January’s 5.6% gain makes the rest of the year looks bright according to the January indicator. 

The logic of the January indicator, according to aficionados, is as follows: 

January Indicator

And the payoff for the rest of the year appears rich:

January Indicator

 

But can high odds of a rich payoff result from such a simple forecasting method?

Yes, according to a Wall Street technician who was quoted recently in Barron’s, … the historical ‘facts and figures’ are what they are. The data is the data.