• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock January’s Performance: A Good Start for 2023?
Stock

January’s Performance: A Good Start for 2023?

by January 31, 2023
by January 31, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

“As the S&P 500 goes in January, so goes the year.” If you’re a Stock Trader’s Almanac reader, you’ll be familiar with this adage. According to the Almanac, since 1950, this seasonal indicator has registered 12 major errors. That’s an 83.3% accuracy ratio. Given that 2023 is a pre-election year, another point to keep in mind is that, in 15 of the last 18 pre-election years, the full year followed January’s direction.

It looks like the Almanac‘s expectations are on track for January, which could mean a positive stock market performance in 2023. After a dismal 2022, January’s performance has injected a dose of optimism into the markets. The S&P 500 index ($SPX) is up 6.17% in January, and S&P 500 stocks have displayed strong performance—Tesla (TSLA), Amazon (AMZN), Apple (AAPL), and Nvidia (NVDA), to name a few.

The January Indicator Trifecta

Even though nothing is certain about the stock market, when all three of the January indicators check out, it adds a bit of comfort in terms of investor sentiment. We had a Santa Claus rally in the last five trading days in December and the first two trading days in January. It was a mild rally, but a rally, nonetheless. January’s First Five Days were up and the January Barometer was positive.

Jeffrey Hirsch, Editor of the Stock Trader’s Almanac, noted in a tweet that, when all three January indicators are up, the next 11 months are up 87.1% of times. That’s a significant probability. Does it mean you can sit back, relax, and adopt a buy-and-hold strategy where you can watch your returns grow? If you’ve been trading for a while, you know that’s never the case. There’s always a chance that we could see a selloff during the next 11 months. Any unforeseen event could bring increased volatility to the markets, which is something you have to be prepared for, always.

Sector Plays

Looking at sector performance in January, topping the list is Consumer Discretionary, up 8.76% followed by Communication Services, which was up 8.60%. Looks like risk-on trading may be coming back to the table.

CHART 1: JANUARY S&P SECTOR PERFORMANCE. Top of the list is Consumer Discretionary, followed by Communication Services. Chart source: StockCharts.com. For illustrative purposes only.

The ratio of Consumer Discretionary to Consumer Staples (see chart below) indicates that Discretionary is outperforming Staples, which suggests that, for now, investors are leaning towards more offensive strategies. Why? A lot of it may have to do with investor expectations. Earnings season is underway and expectations are low. So, even though earnings have been lukewarm, investors aren’t rushing to sell their holdings. There’s also a Fed meeting going on and investors are complacent with the idea of a soft landing. The CBOE Volatility Index ($VIX) has been trading below 20, which supports investor complacency.

CHART 2: CONSUMER DISCRETIONARY VS. CONSUMER STAPLES. When Consumer Discretionary stocks are outperforming Consumer Staples, it’s an indication that investors are leaning toward risk-on trading.Chart source: StockCharts.com. For illustrative purposes only.

Technology stocks have bounced back after getting beaten up in 2022. The Nasdaq Composite ($COMPQ) is up over 10% in January. Interestingly, small-cap stocks are also on the rise, as indicated by the S&P 600 Small Cap index ($SML).

What Should You Watch Going Forward?

According to Hirsch, in pre-election years, February tends to be stronger than average years, and the Nasdaq tends to be the best-performing index, with the Russell 2000 being the second-best. Given that technology stocks and small-cap stocks ended January on a strong note, there’s a chance the trend may continue in February.

On the StockCharts platform, review the Market Summary on a regular basis. Going into February, pay special attention to the Nasdaq Composite and the S&P 600 Small Cap index. Stocks in these indexes could perform well if things pan out as laid out in the Almanac. Remember, markets are seasonal. Any signs of a reversal in a specific area of the market could mean another area is getting ready to take over. Recognizing changes in trends and capitalizing on them is what technical analysis is all about.

Regular monitoring of sector and industry performance via the Sector Summary and Market Summary tools can go a long way in helping you make your investment decisions. Set up Your Dashboard so it gives you a big-picture view of the market so you can easily see when changes are taking place in the market. Add the Stock Trader’s Almanac 2023 to the mix, and you’ll be armed to plan your trades for the rest of the year.

You Might Also Like
  • This Is Why You Shouldn’t Have Bought Disney (DIS) After Earnings
  • Ending The Sloppy Choppy Phase
  • Three Sectors Stand Out and One Sports a Bullish Breakout
  • DJIA/Gold Ratio vs. Consumer Sentiment
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Iron Condor Vs. Short Strangle
next post
What are the Equity Market’s Positive Signs?

You may also like

The Best Five Sectors, #23

June 15, 2025

Breadth Overbought Near-Term

July 15, 2023

Low Vol To High Beta Stock Rotation Is Surging

July 14, 2023

Sector Spotlight: Monthly Charts Suggest Downside Risk is Limited

November 2, 2023

The Bond Market is Signaling a Potential Short-Term Trading Opportunity

March 19, 2024

Sector Spotlight: Energy & Tech’s Opposite Seasonal Rotations

July 31, 2023

Equities Remain in “Go” Trend as We See Rotation into...

October 21, 2024

Jesse Livermore on Mistakes & Rising From the Ashes

September 21, 2023

Consumer Staples Stocks Have Broken Key Support – Here’s What...

May 23, 2023

S&P 500, Dow Jones Hit All-Time Highs Again; Tech Stocks...

February 3, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Find Highest Probability Counter-Trend Setups

      June 25, 2025
    • Small-business AI use is lagging, but one firm is channeling Sherlock Holmes and knocking out ‘grunt work’

      June 25, 2025
    • Nvidia CEO Huang sells $15 million worth of stock, first sale of $873 million plan

      June 25, 2025
    • Shifting Tides in the Stock Market: A New Era for Bulls?

      June 24, 2025
    • How to Use Fibonacci Retracements to Spot Key Levels

      June 24, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,611 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,893 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,586 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,549 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,427 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,148)
    • Investing (538)
    • Stock (2,631)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Find Highest Probability Counter-Trend Setups

      June 25, 2025
    • Small-business AI use is lagging, but one firm is channeling...

      June 25, 2025
    • Nvidia CEO Huang sells $15 million worth of stock, first...

      June 25, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,148)
    • Investing (538)
    • Stock (2,631)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    GNG TV: “Building” Go Trends in...

    May 25, 2023

    Large-Cap Growth Threatens the S&P Rally

    June 25, 2024

    DEFENSE IS ON THE FIELD |...

    April 27, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here