Good start
2011 got off to a fast start on Monday, the first trading day of the year, as the major indices were up between 1% and 2%. The action was mostly sideways to slightly higher for the rest of the week and if the January axioms hold true, it could indicate that the stock market will have a good year.
For the TSP, the C-fund added 1.16%, the S-fund gained 0.82%, and the I-fund actually lost ground, 0.83%, as the dollar had a strong week. Bonds (F-fund) were up 0.02%, and the G-fund picked up 0.05%.
The narrow ascending trading channel in the S&P 500 has been relentless for the last 6-weeks, despite many indications that the market is overbought. The trend is your friend, and no one knows how long this one can last, but the index is stretched and we have been flirting with a 125-point spread between the 200-day EMA and that has been a tough level to crack over the last couple of years.
Chart provided courtesy of www.decisionpoint.com
The current spread is 114-points after hitting 126-points earlier in the week, but keep in mind that the 200-day EMA is rising daily.
The following is a reprint from one of our daily commentaries from this past week:
You've probably heard the old Wall Street axiom, "As goes January, so goes the year"; Meaning, if January is good, the year will be good. If January does poorly, the market's returns underperform during the rest of the year.
It goes even further. As the first week (1st 5 trading days) of January goes, so goes January, thus so goes the year.
This first chart shows the data for every week since 1928, and what happens during the following 51-weeks that follow. This isn't just January. It is any week, at any time during the year, and what happens during the next 51-weeks that follow.
So, we see that 55.64% of all of the trading weeks since 1928 were positive, while 43.74% were negative. The 51-week return following an up week is positive 67.37% of the time, and negative 32.63% of the time. The 51-week return following a down week is positive 63.66% of the time, and negative 36.29% of the time. Nothing earth shattering, but there is a more positive bias after a good week.
Now let's take a look at the returns of just the first week of the year and the 51-weeks that follow: After a positive week one in January, the following 51-week return is positive nearly 70% of the time. After a negative first week in January, the following 51-week return is positive just 44.44% of the time.
source: http://www.ritholtz.com
So there is some truth to the axiom, and that seems to make what happens in the month of January, and the first week in January, a little more important than other months / weeks of the year.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
2011 got off to a fast start on Monday, the first trading day of the year, as the major indices were up between 1% and 2%. The action was mostly sideways to slightly higher for the rest of the week and if the January axioms hold true, it could indicate that the stock market will have a good year.
For the TSP, the C-fund added 1.16%, the S-fund gained 0.82%, and the I-fund actually lost ground, 0.83%, as the dollar had a strong week. Bonds (F-fund) were up 0.02%, and the G-fund picked up 0.05%.
The narrow ascending trading channel in the S&P 500 has been relentless for the last 6-weeks, despite many indications that the market is overbought. The trend is your friend, and no one knows how long this one can last, but the index is stretched and we have been flirting with a 125-point spread between the 200-day EMA and that has been a tough level to crack over the last couple of years.
Chart provided courtesy of www.decisionpoint.com
The current spread is 114-points after hitting 126-points earlier in the week, but keep in mind that the 200-day EMA is rising daily.
The following is a reprint from one of our daily commentaries from this past week:
You've probably heard the old Wall Street axiom, "As goes January, so goes the year"; Meaning, if January is good, the year will be good. If January does poorly, the market's returns underperform during the rest of the year.
It goes even further. As the first week (1st 5 trading days) of January goes, so goes January, thus so goes the year.
This first chart shows the data for every week since 1928, and what happens during the following 51-weeks that follow. This isn't just January. It is any week, at any time during the year, and what happens during the next 51-weeks that follow.
So, we see that 55.64% of all of the trading weeks since 1928 were positive, while 43.74% were negative. The 51-week return following an up week is positive 67.37% of the time, and negative 32.63% of the time. The 51-week return following a down week is positive 63.66% of the time, and negative 36.29% of the time. Nothing earth shattering, but there is a more positive bias after a good week.
Now let's take a look at the returns of just the first week of the year and the 51-weeks that follow: After a positive week one in January, the following 51-week return is positive nearly 70% of the time. After a negative first week in January, the following 51-week return is positive just 44.44% of the time.
source: http://www.ritholtz.com
So there is some truth to the axiom, and that seems to make what happens in the month of January, and the first week in January, a little more important than other months / weeks of the year.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
