Chart: January’s Returns Forecast Negative Returns for the Year

Earlier today we discussed that January’s returns could mean bad news for the markets this year. Here’s a chart that shows the historical relationship between January returns (horizontal axis) and annual returns (vertical axis) over the same year. Data comes from the Dow Jones Industrial Average, going back to 1927.

Negative January Returns Forecast Negative Returns for the Year

The upward sloping line shows that, on average, annual returns are higher in years when January returns are higher. There’s a direct relationship between the two… even though a number of other factors also influence the year-end outcome.

The colored dots in the square box on the left represent the 10 worst January returns since 1927. Green dots show positive annual returns, following a January return of -5% or worse, and red dots show negative ones.

Positive returns occurred four out of 10 times, with an average annual return of 8.9%. Negative returns occurred six out of 10 times, with an average annual loss of 8.7%.

Dow Heading for Historic Drop – Take Immediate Action

World-renowned economist Harry Dent now says, “We’ll see an historic drop to 6,000… and when the dust settles – it’ll plummet to 3,300. Along the way, we’ll see another real estate collapse, gold will sink to $750 an ounce and unemployment will skyrocket… It’s going to get ugly.”

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Categories: Stocks

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.