LIVE MARKETS-Temperatures are falling but January barometer suggests stocks won't fly south

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TEMPERATURES ARE FALLING BUT JANUARY BAROMETER SUGGESTS STOCKS WON'T FLY SOUTH

Just as investors are watching weather signals outside, they are closely following patterns in the stock market this January, as a concept known as the January Barometer says that market performance in January is a potential signal for how stocks will perform the rest of the year, LPL Financial Chief Technical Strategist Adam Turnquist writes.
And with the end of January just days away, the S&P 500 .SPX is holding onto a near-2% gain since the start of the year. That "month-to-date gain provides some cushion heading into the final days of January trading," he says in a note this week.
"Much like winter storms can influence travel patterns and economic activity early in the year, January’s market performance has long been viewed as a potential signal for what lies ahead," Turnquist explains.
"This concept, known as the 'January Barometer,' suggests that market momentum established in the opening month often carries through the remainder of the year, making the first weeks of 2026 particularly important."
The rule, he notes, comes from the creator of the Stock Trader's Almanac, who first identified it as a seasonal pattern in 1972, coining the phrase: “As goes January, so goes the year.”
But Turnquist says the maxim has proven to be reliable, noting, for example: "Since 1950, the S&P 500 has generated an average annual return of 16.9% in years when January finished in positive territory, with the index ending higher 89% of the time."
In addition, "positive Januarys" have led to an S&P 500 an average February through December price return of 12.2%, with the index finishing higher 87% of the time.
On the flip side, he notes, "when January posted a loss, average annual returns fell to -1.7%, and stocks finished the year higher in only 50% of instances."
This week presents lots of cases for the trend in the market to change, including a Federal Reserve rate decision later today and several earnings reports for megacap companies. But Turnquist says last week’s rebound from Tuesday’s 2% pullback lifted the S&P 500 back into positive territory for the month and that risk appetite seemed to recover "as geopolitical tensions tied to Greenland eased and interest rates stabilized."

(Caroline Valetkevitch)

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