First Five Days Negative, Trifecta 0 for 2 By: Jeffrey A. Hirsch & Christopher Mistal | January 08, 2024 | Email | Print

Despite a strong advance today, S&P 500 failed to fully recover its losses from last week and as of today’s close, is down 0.1% year-to-date and thus our First Five Day (FFD) early warning system is negative. Since 1950, the previous 26 down FFD were followed by 14 up years and 12 down with an average gain in all years of just 0.3%. The last negative FFD was in 2022 when S&P 500 declined 1.9%. In 2022, S&P 500 went on to decline 5.3% in January and thus our January Barometer (JB) was negative. For 2022, S&P 500 was down 19.4%.

 

 

Last week the Santa Claus Rally (SCR) was negative, and today the FFD was negative. At this juncture there are two possible outcomes remaining for our January Indicator Trifecta. Our JB can either be positive or negative. The historical results of both are visible in the following tables. 

 

 

A positive JB would certainly boost prospects for full-year 2024 even after today’s down FFD and last week’s negative SCR. Following the previous three occurrences when the SCR and FFD were negative and the January Barometer was positive, S&P 500 advanced three times over the remaining eleven months and for the full year with average gains of 15.1% and 19.9% respectively. The December Low Indicator (2024 STA, page 36) should also be watched with the line in the sand at the Dow’s December Closing Low of 36054.43 on 12/6/2023.

 

At this juncture we remain bullish, and our base case scenario outlined in our 2024 Annual Forecast is still in play. In our forecast, we noted election years are not as strong as pre-election years and we did not expect a repeat of the gains enjoyed in 2023, when the January Trifecta went 3 for 3. There is a sitting president running for re-election which has historically been bullish for the market, the JB could still be positive, and Dow’s December Closing Low has not been breached.