2010-01-04 15:23:00
Does The First Trading Session of a New Year Indicate Where The Markets are Heading?
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2010 is off to a strong start for the three major US market indexes.
The DJIA is currently up about 165 points (+1.58%), while the Nasdaq is up 37 points (+1.63%) and the S&P 500 is up 17.47 points (+1.57%).
The first question is - historically speaking, does a strong opening session mean that the markets will finish higher over the course of the entire year? Let's look at the stats for each individual index:
Since 1929, the DJIA has posted 43 "green" days to start the year.
In a year when the DJIA posted a "green" session to start the year, the index ended finishing up 33 out of 43 times for the entire year. That's 77%, meaning that today's strong session certainly bodes well for the rest of the year.
In case you were wondering, the DJIA has had a "red" day to start the year 37 times since 1929. Of these 37 instances where the DJIA started off "red", the index ended up closing down for the year 18 times.
Now, the NASDAQ:
Since 1972, the NASDAQ has posted 20 "green" days to start the year.
Of these 20 instances where the NASDAQ posted a positive session to start the year, the index finished up for the year 13 times. This is a 65% success rate.
In case you were wondering, the NASDAQ has posted a "red" session to start the year 18 times. Of these 18 instances, the NASDAQ has only ended up down for the year 4 times.
Lastly, the S&P 500:
Since 1951, the S&P 500 has posted a "green" session to start the year 28 times.
Of these 28 instances, the S&P 500 has gone on to close the year positive 21 out of 28 times. This is a 75% success rate.
On the other hand, the S&P 500 has posted a "red" session to start the year 31 times.
Of these 31 instances, the S&P 500 has gone on to finish down for the year a total of 9 times.
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So, to recap:
The DJIA has had a positive year 77% of the time after posting a positive first session
The NASDAQ has had a positive year 65% of the time after posting a positive first session
The S&P 500 has had a positive year 75% of the time after positing a positive first session
Source: Where Did The DJIA/NASDAQ/S&P 500 Trade On..
Photo: dflorian1980
Filed under: Stock Market Education
1 COMMENT - What Say You?
Comment by M. Heineman on January 05, 2010 @ 6:27 pm
Manufacturing is reported up per Newsday January 5 " US manufacturing sector grew at its fastest pace in nearly four years in December, it's fifth cnsecutive month of expansion.
On a darker note however, US consumers and businesses filed for bankruptcies at the 7th highest rate on record. 1.4 petitions were submitted. That is an increase of 34% from the previous year. Maybe it is slightly molified because December 2009 bankruptcies were up 22% over the same period in December 2008 which suggests that the activity had subsided by year end.
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