One of the countless canards bandied about by the mass media is how instructive January trading activity is. I disagree. Let’s take a couple of quick, simple examples.
First of all, there’s this notion that there’s all kinds of pent-up energy on the first trading day of the year, particularly since all the tax selling is done and people are going crazy with FOMO. We need look only to this very year to see what nonsense this is.
The first first day of trading was on Jan. 4, 2021, and the market got positively slammed. Crazy, huh? Considering how bullish that day was supposed to be, you’d assume it would be a harbinger of a terrible 2021, when in point of fact that day was the LOW FOR THE ENTIRE YEAR.
More broadly, the old saying “As goes January, so goes the year” is one of the best known maxims around. Please observe January 2017. It was a red candle; the lows for the month were substantial; and the closing price was well below December 2016. What transpired afterward, then? Basically an “up” month for virtually every single month, as far as the eye can see.
The lesson in this is simple: the best indicator for what is going to happen in 2022 is the entirety of trading activity between Jan. 1, 2022, and Dec. 31, 2022………….with the exclusion, of course, of the Juneteenth market holiday.