As Goes January

The market has certainly not put in one of it's better months to start off the new year.  Of course the same thing could have been said about trading last year at this time.  Last year the markets churned around for much of January before having a short but nasty 6% decline into early February.  Sellers then missed out on a pretty good market for the next six months as the S&P 500  tacked on just shy of 14% in gains.  It's because of things like this that I'm inclined to be skeptical of those who draw all sorts of statistical comparisons with Januarys of the past.  

The author Salil Mehta seems to agree with me and has an interesting quantitative blog for those of you who are into this sort of thing called "Statistical Ideas".  He's just published an article called  "As Goes Early January, so Goes Nothing" . He does a better job than I can in his article of debunking the crowd that gets caught up in the "as goes x, so goes y" stream of analysis or as Mr. Mehta puts it the "case of dangerous people abusing probability to confuse anyone into believe there is definitely a there there."

Look the market may go down this year and there are a lot of compelling reasons that one could list why this might happen.  But I think it's dangerous to look for trading patterns in one month and apply them out to the whole world as if they are something written in stone and bound to occur.  Glad to see others agree with me.

I will be attending the "Inside ETFs" conference next week.  I will try and pass on anything that I think is worth mentioning from the conference but posting will be sporadic next week.  Back to a Monday-Thursday Schedule the week of 02.03.15.

*Long ETFs related to the S&P 500 in client and personal accounts.