There is a saying on Wall Street that as January goes, so goes the year, and as the first five days of January go, so goes January.
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This isn’t just an omen or a saying. There is data to back it up. According to the WSJ Market Data Group, when the Dow Jones Industrial Average has ended the first five days of the year with a gain greater than 2%, it averages a yearly gain of 15.27%. Furthermore, the first five trading days of a new year have predicted the direction of the full year’s outcome 65% of the time.
When the S&P 500 posts a gain greater than 2%, it averages a yearly gain of 16.33% and finishes the year higher 95% of the time. For the Nasdaq Composite, when the index finishes the first five days with a gain greater than 3%, it averages a yearly gain of 17.54% and finishes the year higher 70% of the time.
The major U.S. stock indexes had another record setting session on Monday, although the gains faded near the end with the Dow posting its first losing session of the new year. The S&P 500 and Nasdaq notched their fifth-straight record closes. Still, the Dow gained 2.3% in the first five sessions of the year, the S&P was up 2.8% and the Nasdaq added 3.7%.
The markets opened higher on Tuesday, with the Dow, S&P 500, Nasdaq and Russell 2000 all opening at record-highs.