what is the january barometer 
the term january barometer refers to the belief held by some traders that the investment performance of the s p 500 index in january can predict its performance for the rest of the year for example proponents of this view believe that if the s p 500 rises between jan 1 and jan 31 this will foretell a positive result for the remainder of the year similarly it holds that if the market fares poorly in january it will likely perform poorly thereafter as well understanding the january barometerthe idea of the january barometer was first devised by yale hirsch creator of the stock trader s almanac in 1972 however it is still used by some traders to this day traders who believe in this hypothesis may use it to try and time the market that is they may invest in the market only in the years when the barometer predicts that the market will rise and stay out of the market when the barometer forecasts a market pullback proponents of this view will cite data showing that the january barometer has registered only 11 errors between 1950 and 2021 giving the indicator an accuracy ratio of 84 5 1 however this phenomenon may be largely illusory after all from 1945 to 2021 u s equity markets generated a positive annual return roughly 70 of the time 2 therefore the january barometer could just be a secondary effect of the general tendency of u s equities to creep higher each year rather than a special phenomenon that can be used to improve one s market timing critics of the january barometer theory will point out that similar phenomena have not been consistently found outside of the united states and therefore that it may be a temporary anomaly specific to u s equity markets the january barometer may have a self reinforcing character if u s investors react to a strong january by investing more heavily in stocks then this itself might cause prices to rise if true this could explain why the correlation between january and annual market returns is more prevalent in the u s than in other regions where the january barometer theory is less well known real world example of the january barometerin recent years the january barometer has had mixed results in 2022 the s p 500 declined by more than 5 in january and ended in a 20 loss in 2021 the s p 500 declined by 1 1 in january but went on to gain just under 27 on the year the results in 2020 were more ambiguous with the s p 500 losing 0 16 in january only to go on to a 16 rally throughout the remainder of the year in 2019 the s p 500 climbed by 7 87 in january and finished the year up 28 9 2