Did the January Barometer just signal a crash?The January Barometer is a statistical phenomenon that looks back at the last 50+ years of the SPY's history and states that (as of last year):
A POSITIVE close in January has a 83% chance of a positive year
A NEGATIVE close in January has only a 65% chance of a positive year (we just had this happen)
A POSITIVE close in January has a 70% chance of a positive February
A NEGATIVE close in January has a 60% chance of a negative February
January 2020 had a negative close but ended the year positively which made it fall within the 65% probability expect. However, that January did correctly predict a negative February which had a 60% chance of happening.
These are only statistics... no one KNOWS the future... but understanding this concept should hopefully give traders some insight on how to position themselves going into next month, the rest of the quarter, and the rest of the year!
