On the January Barometer

You are likely to hear more and more about the "January Barometer," which is a theory which hods that as January goes, so goes the year. Therefore, we are going to raise and discuss this issue now. The 2010 Stock Trader's Almanac states this theory is essentially 91% accurate, dating back to 1950, with only a few misses. Seasonality is always a tough idea to trade on a standalone basis. Typically, seasonality works best when it is married to a sound technical setup, to boot. In this case, I believe the technicals are aligned for a weak January, perhaps setting the tone for the year. The test, of course, will be seeing if bears can stuff the usually dip-buying frenzy we have seen in recent years, leading to V-shape rallies to fresh higher. As for the market intraday, the indices are pushing fresh lows. We have the hallmarks of a "trend day" lower, which means the risk of a close on the lows is elevated.