The first negative January for the S&P 500 since 2010 is giving historians of Wall Street pause, considering that historically a bad January bodes ill for a barometer of the coming year.
According to the Stock Trader’s Almanac, when January is negative the chances of the year finishing in the positive column are roughly 50-50. Jittery investors are seeking safer routes; long-term U.S. Treasury bonds are selling well.
Because the Eurozone’s inflation is much weaker than expected and emerging markets are vacillating, there is even more cause for concern.
On Thursday, the S&P 500 closed at 1,794.19. Bryan Sapp, senior trading analyst at Schaeffer’s Investment Research, said the key number is 1770, asserting, “The 1,770 level on the S&P 500 has held (so far), and it looks like it could provide some support for the market. Meanwhile, the index rallied right up near the round-number 1,800 level yesterday, but retreated on an intraday basis.”
“Going forward, the bulls will want to see this area taken out, as it could be a sign that the market is ready to resume its longer-term uptrend,” he claimed.