The January Effect (https://www.investopedia.com/terms/j/januaryeffect.asp) is a widely followed theory. It is the basic idea that so goes January so goes the year. The January effect, however, has not proven to be totally reliable and the small data set leaves the theory far from a scientific proof. In his most recent weekly missive, Jeff Saut refers to the December Low Indicator which has far more statistical relevance when gauging full year results. In essence, the December Low Indicator states that the market will only end the full year lower if the December low is breached during the first quarter. If not, the year is likely to end higher. The December low in the Dow was 8,118 so keep an eye on it. The Indicator has been nearly flawless over the last 60 years.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.