Best Jan. for stocks since ’97 is bullish

Despite a late-month swoon that spooked 401(k) investors, the best January for large U.S. stocks in 20 years bodes well for the rest of 2018.

There’s an old saying on Wall Street, made famous by The Stock Trader’s Almanac: “As January goes, so goes the rest of the year.” And given that the first month of the year went well (the Standard & Poor’s 500 stock index gained

5.62%, its best January since 1997), investors fearing a market meltdown might have less to worry about, history says. Based on the Almanac’s “As January goes ... ” predictor, which has a

86.8% accuracy rate since 1950, stocks’ upward climb is likely to continue.

The probability that stocks will keep going up rises even more given that the market notched a “trifecta” of seasonal stock market wins, according to the Almanac. Not only were stocks up in January, they also rose in the first five days of 2018, a period seen as an “early-warning signal,” as well as during the “Santa Claus rally,” a seven-day stretch that ended Jan. 3.

The previous 29 times since 1949 when all three indicators were up, the S&P 500 rose 26 times, or 90% of the time, in the final 11 months of the year, Almanac data show. The average gain was 12.9%.

The good start to the year, coupled with past performance history, are the major reasons why Jeffrey Hirsch, the Almanac’s editor, is looking past the recent market turbulence and sticking with his bullish 2018 market call.

“My forecast for Dow 29,000 (or a full-year gain of 17%) is still in the cards,” he told USA TODAY.