Over the years I have noticed that the month of January has a strong tendency to mark key turning points in markets and asset classes; we will often see important highs and lows made during the month of January and if we had simply allowed this information to inform our investing choices we would usually have been better off for it.
There is no market pattern that works every single year, but what I call the "January Tendency" has a strong enough track record that I believe it's worth keeping in mind over the next couple of months as we enter 2019. Let me show you a few examples that I believe are important and which help to illustrate just how important it is to watch how January plays out across markets next month:
TSX-V Composite (Weekly)
Recent years that had strong trends in the TSX-V (2013, 2016, and 2018 all had +/- 20% or more changes for the year) all experienced turning points in January. Even in 2015 which had a terrible 2nd half, the TSX-V didn't get more than a couple of percent above its January high before diving lower in July.
An even better example is Haliburton (NYSE:HAL) which has made a major high/low each year for the last six years:
HAL (Weekly)
HAL is also a powerfully trending stock that always seems to either be in a powerful uptrend or a brutal downtrend.
And then there's gold which is very similar to HAL in that the turn of the year has a strong tendency to mark major highs & lows:
Gold (Weekly)
Sometimes price action in January marks a trend reversal, and less often it simply serves to reaffirm the existing trend. With both the TSX-V and HAL (and many other commodity related equities/sectors) mired in brutal downtrends as 2018 draws to a close could we see another key inflection point arrive in January 2019?
I'm interested to hear readers' thoughts on the January Tendency and other notable examples of this market phenomenon (please share in the comments to this post).
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