Does the January Barometer Work? 97 Years of S&P 500 Data, and How My 2017 Call Turned Out
Want the daily routine? Get the free 15-Minute Swing Trader’s Checklist. Get it free →
By Spencer Li, CFTe · Last updated: 26 October 2026
The January Barometer is the Wall Street saying “as January goes, so goes the year”. If the stock market rises in January, the full year should rise too. I recounted it on S&P 500 month-end closes from 1929 to 2025, and January’s direction matched the year’s direction in 69 of those 97 years, which sounds impressive until you notice that the market simply went up in 65 of them. So the barometer is mostly measuring how often stocks rise, and since 2000 it has matched the year only 15 times out of 26.
I first wrote about the barometer on this blog in February 2017, and I made a call with it. In this post, I want to go through what the indicator says, what the research found, how my call turned out, and what I would do with it today.
What is the January Barometer?
Most market folklore has no birthday. This one does. Yale Hirsch first wrote it up in the 1972 edition of his Stock Trader’s Almanac, and by his count it had been right in 20 of the previous 24 years.
The rule is simple. Take the stock index’s return for January. If it is positive, expect a positive year. If it is negative, expect a weak one.
Out of curiosity, I re-ran Hirsch’s 24 years, 1948 to 1971, on S&P 500 closes. I got exactly 20 hits out of 24, or 83.3%. So the original claim holds up on the data he would have had, which is more than you can say for most indicators with a catchy name.
The interesting question is what happened after 1972, once everyone had read the Almanac.
Does a positive January really mean a positive year?
Imagine a weather forecaster in Singapore who says “hot and humid” every single morning. They would be right almost every day, and nobody would call them a genius. Meteorologists have a name for that lazy forecast. They call it climatology, and a forecaster only earns their salary by beating it.
The stock market has a climate too. It tends to go up. Here is the barometer next to the lazy forecast of “this year will be up”, counted on S&P 500 closes, price only, with dividends left out.
| Period | Years | Barometer right | Market simply rose |
|---|---|---|---|
| 1929 to 2025 | 97 | 69 (71.1%) | 65 (67.0%) |
| 1950 to 2025 | 76 | 56 (73.7%) | 56 (73.7%) |
| 1972 to 2025 | 54 | 38 (70.4%) | 40 (74.1%) |
| 2000 to 2025 | 26 | 15 (57.7%) | 18 (69.2%) |
Since 1950, the barometer and the lazy forecast tie at 56 years each. Since Hirsch published, the lazy forecast wins. Since 2000, it wins by three years.
Psychologists call this base-rate neglect. We get excited about a 71% hit rate and forget to ask how often the thing happens anyway. It is the same trap as a newsletter that says “buy” every single week and then brags about its hit rate after a long bull market.
To be fair to January, the direction is only half the story. The size of the move after it is where the barometer still shows something, and that is where the research went.
What did the research actually find?
Three finance professors, M. J. Cooper, J. J. McConnell and A. V. Ovtchinnikov, took the saying seriously. In a 2006 paper, they used 147 years of US stock returns and found that the return over the 11 months after a positive January was “significantly higher, by a wide margin” than after a negative one.
My own recount points the same way. From 1950 to 2025, February to December rose 12.2% on average after a positive January, and only 2.1% after a negative one.
In a 2009 follow-up, “What’s the Best Way to Trade Using the January Barometer?”, they extended the data to 2008 and tested how an investor should act on it. They compared two ways of using the signal.
- Long or T-bill. After a positive January, hold stocks to December. After a negative January, sit in Treasury bills, the short-term US government bonds.
- Long or short. After a positive January, hold stocks. After a negative January, bet against them.
Their answer was the first one. Stepping aside after a bad January beat both shorting and holding the market the whole time, “by significant margins over the 152 years for which we have data”.
Strategy 1, long or T-bill, against strategy 2, long or short, 1857 to 2008.
Source: Page 21 of “What’s the Best Way to Trade Using the January Barometer?” (M. J. Cooper, J. J. McConnell, A. V. Ovtchinnikov, 2009)
The same ranking held when they looked only at the years from 1940 onwards.
Strategy 1 against strategy 2, 1940 to 2008.
Source: Page 23 of “What’s the Best Way to Trade Using the January Barometer?” (M. J. Cooper, J. J. McConnell, A. V. Ovtchinnikov, 2009)
So a negative January is better read as a reason to get defensive than a reason to go short.
Now, there is a catch, and it came out the same year. A 2009 paper by Huang ran an out-of-sample test of the same January signal and concluded that it “does not outperform a buy-and-hold approach in the US equity market”. Huang’s argument is about opportunity cost. Sitting in T-bills for 11 months is expensive when the market rises anyway.
My recount shows why that bites. Since 2000, the S&P 500 had 13 negative Januaries, and in 9 of those 13 years the market still rose from February to December. An investor who stepped aside every time would have sat out most of those rallies.
If you would rather not track seasonal signals at all, my free 15-minute swing trader checklist is the daily routine I use myself.
Is the January trade the same as the Santa Claus rally?
People often mix the two up, so here is how I think about them.
The Santa Claus rally is about the end of the year. In my weekly outlook on 11 December 2025, I said that “historically” the market “tends to rally towards the holiday season”, and that it had already started to. The January Barometer is about the start of the year, and it asks what January’s direction says about the 11 months after it.
Back in 2016, I tested a simple version of the January trade. Buy the index on 1 January, sell it on 1 February, and see what you get. The last five years looked great, and I got excited, so I went further back and the excitement wore off quickly.
That old table never named the index, and its numbers do not match the S&P 500, so I re-ran it on S&P 500 closes. Here is January’s return, compounded over each five-year block.
| Years | January only, compounded |
|---|---|
| 1996 to 2000 | +9.4% |
| 2001 to 2005 | −1.8% |
| 2006 to 2010 | −14.0% |
| 2011 to 2015 | +4.8% |
| 2016 to 2020 | +9.9% |
| 2021 to 2025 | +3.8% |
The lesson is the same as it was in 2016. Pick the window that excites you, and then go and look for the windows that would embarrass it. The swing from +9.9% to −14.0% for the same one-month trade tells you that one good stretch proves very little. I go through the full process for testing an idea like this in my guide on how to backtest a trading strategy.
How did my 2017 call turn out?
At about 2am Singapore time on 1 February 2017, I sat down to write the original version of this post. January had been kind to Singapore and lukewarm in the US, and I posted a chart of each.
The STI in January 2017, the chart from my original post.
The Dow in January 2017, the chart from my original post.
The percentages on those charts were rough, and the Dow chart was taken a day before January closed. On month-end closing prices, January 2017 finished with the STI up 5.8%, the Dow up 0.5% and the S&P 500 up 1.8%. All three were positive, so the barometer said up.
In that post I wrote, “Going forward, I expect the stock market in both Singapore and U.S to be bullish.”
It was. From the end of January to the end of December 2017, the S&P 500 rose another 17.3%, the Dow rose 24.4% and the STI rose 11.7%. For the full calendar year, the S&P 500 finished up 19.4%.
Now, don’t get me wrong. One right call proves nothing about a rule that has missed in roughly 3 years out of 10 since 1929. 2017 was also a year the lazy forecast would have got right, because the market rose.
The misses since then are more instructive. In 2018, January was up 5.6% and the year still ended down 6.2%. In 2020, January slipped 0.16%, which called for a bad year, and the S&P 500 finished 2020 up 16.3%. My favourite is 2011, when the index closed the year at 1,257.60 against 1,257.64 a year earlier. The barometer said up, and the year was down by four hundredths of a point.
And this year? January 2026 closed up 1.4%, so the barometer points up. As at the close of 23 October 2026, the S&P 500 was up 11.4% for the year. We will know in about two months whether January got this one right, and I would not bet the farm either way.
Calls like this are the reason I keep a routine. The free 15-minute swing trader checklist is the one I run every day.
Should you trade on the January Barometer?
On 10 January 2023, a trader on Reddit’s r/StockMarket made the bull case with another early-January indicator, writing, “That is 83% chance of positive for the whole year.”
They were right that year. January 2023 rose 6.2%, and 2023 finished up 24.2%. But the number they quoted has the same weakness as every hit rate in this post, which is that the market rises in most years anyway. An 83% hit rate in a market that goes up roughly 7 years in 10 is a much smaller edge than it sounds.
Back in 2017, I called the barometer “largely a super long-term strategy (10-20 years)”. That is still the right frame. In any single year it can be flat wrong, and the edge only shows up when you average many years together. Even then it has shrunk. From 2000 to 2025, February to December rose 8.6% on average after a positive January and 6.8% after a negative one, which is a much thinner gap than the 12.2% against 2.1% since 1950.
In the same post I called it “a probabilistic approach” and said I would still be making my trades on price action. Hence, personally, I treat it as background. It can tilt how cautious I feel in February, and it never decides a trade. Every entry and exit still comes from the price chart, and if you want to see how I read the bigger picture on a chart before zooming in, I explain it in combining price action across multiple timeframes.
Do note that 26 years is a small sample. If you want to know why it is so hard to judge a rule on a couple of dozen data points, I work through the numbers in the law of large numbers in trading.
FAQ
What is the January Barometer?
It is the Wall Street saying “as January goes, so goes the year”. A rising stock market in January is read as a sign of a rising year, and a falling January as a sign of a weak one. Yale Hirsch introduced it in the 1972 Stock Trader’s Almanac.
How accurate is the January Barometer?
On S&P 500 closes from 1929 to 2025, January’s direction matched the full year in 69 of 97 years. The market rose in 65 of those years anyway, so most of that accuracy comes from stocks usually going up. Since 2000 it matched the year 15 times out of 26.
Did the January Barometer work in 2017?
Yes. January 2017 was positive for the S&P 500, the Dow and the STI, and all three finished 2017 higher, with the S&P 500 up 19.4% for the year.
What should you do after a negative January?
The 2009 Cooper, McConnell and Ovtchinnikov study found that moving to Treasury bills beat going short. A later out-of-sample test by Huang found the signal did not beat simply holding the market. Since 2000, the S&P 500 still rose from February to December in 9 of the 13 years that started with a negative January.
Is the January Barometer the same as the January effect?
No. The January effect is the idea that small-company stocks tend to do well in January. The January Barometer uses the whole market’s January to forecast the rest of the year.
What does the January Barometer say about 2026?
January 2026 closed up 1.4% on the S&P 500, so it points to a positive year. As at 23 October 2026, the index was up 11.4% for the year, with two months still to go.
So that is the January Barometer, the research behind it and how my 2017 call held up. Do you pay any attention to January when you plan the year? And has a seasonal rule ever looked brilliant to you right before it stopped working? Let me know in the comments.
If you want the rest of the basics in one place, my free trading guides are a good place to start.
And if you want a routine that does not depend on the calendar, grab the free 15-minute swing trader checklist.
About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches rules-based swing trading in 15 minutes a day, one system for any market.
Education, not financial advice. Synapse Trading is not licensed by MAS to advise on investment products. Trading carries risk of loss, and past performance is not indicative of future results.
Want the daily routine? Enter your email for the free 15-Minute Swing Trader's Checklist.
Free 5-page PDF, then occasional trading emails. Education only, not financial advice. Unsubscribe anytime. Kit stores your email in the US: see our privacy policy.
Want to learn the full method? The Trading Mastery Program teaches the 4 strategies I have traded since 2011. It suits beginners and experienced traders.
Rather follow the trades as they happen? Daily Trading Signals is our Telegram channel: my trade ideas with entry, stop and exit, and every trade is public.
Questions about this post? Ask in the free Telegram channel →
Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.
