First Five Days Were Down, but a Positive January Barometer Could Salvage Trifecta By: Jeffrey A. Hirsch & Christopher Mistal | January 07, 2022 | Email | Print

Having failed to recover Wednesday’s losses by today’s close, the S&P 500 is now down 1.9% year-to-date and thus our First Five Day (FFD) early warning system is negative. This is the first down FFD since 2016 when the period slide 6.0%. However, the S&P 500 finished that year with a 9.5% gain. Additionally, the FFD indicator does not have a great track record in midterm election years. In the last 18 midterm election years only 8 full years followed the direction of the FFD and of the seven down FFDs in midterm years just two full years were down, 1962 & 1974.

 

Earlier this week the Santa Claus Rally was positive, but today the FFDs was negative. At this juncture there are two possible outcomes remaining for our January Indicator Trifecta. Our January Barometer can either be positive or negative. The historical results of both are visible in the following tables. 

 

 

A positive January Barometer would certainly boost prospects for full-year 2022 even after today’s down FFD. Following the previous six occurrences when the SCR was positive, the FFD were negative and the January Barometer was positive, S&P 500 advanced five times over the remaining eleven months and for the full year with average gains of 9.7% and 11.8% respectively. The December Low Indicator (2022 STA, page 36) should also be watched with the line in the sand at the Dow’s December Closing Low of 34022.04 on 12/1/2021.