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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Year Follows January

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Candles Chart
Small Patterns
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/20/2018
24,463 -201.95 -0.8%
10,579 -92.91 -0.9%
691 -5.96 -0.9%
7,146 -91.93 -1.3%
2,670 -22.99 -0.9%
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25,300 or 23,400 by 05/01/2018
10,800 or 9,800 by 05/01/2018
670 or 710 by 05/01/2018
7,400 or 6,800 by 05/01/2018
2,750 or 2,600 by 05/01/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

Initial Release: February 1, 2017.

Does the Dow Industrial average follow the performance of January? If January ends higher than it began, will the year also end higher? What about the reverse, where January closes lower? Does the Dow also close lower?

What about other months? Are they better predictors of future performance?

To answer these questions, I decided to take a closer look.



The Dow Industrials will close higher at year end 53.4% of the time when January also ends the month higher.

The Dow will close lower 22.7% of the time when January also closes down.

Combined, the Dow follows January's performance 76.1% of the time.

January and December are the best months to predict the following year's up trend, with September being the worst predictor of an upward trend.

For downtrends, September is the best month with June coming in second.

You can download a spreadsheet of the results here (65k .xls zip file).


Background and Methodology

I used data on the Dow industrials going back to 1928 and programmed my computer to find the year end values for the Dow, and the month's end values. I compared how often the Dow closed higher after January closed higher, and how often the Dow ended the year lower when January was also down.

Test 2

I also checked the other months to see if they were better predictors of performance.

For that test, I used a 12-month period, from January end to the next year's January end as one sample period. Then Compared the February to February period, and so on.

In this way, each month received 12 months of performance. That differs from the prior test where the measurement period is from January end to December end (11 months). If I used this approach for the other months, each succeeding month would have less time: February to December then March to December, and so on.



You can download a spreadsheet of the results here (65k .xls zip file).

For the first test: As goes January so goes the year. That saying is true. Here's what I found.

Jan Up
Year Up
Jan Up
Year Down
Jan Down
Year Up
Jan Down
Year Down

When you combine the matching upward trend (January up, Dow up, 53.4% match) with the downward trend (January down, Dow down, 22.7% match), you get 76.1%. In other words, the Dow follows January's direction 76% of the time.

If January closes up, there is a 53.4% chance that the year will also close up. If January closes lower than where it started, the year will also close lower but just 22.7% of the time.

The table shows the various combinations of up and down for January and the Dow industrials.

However, is January the best predictor of future performance or is there another month that works better?


Test 2

In this test, I used a 12-month period for each month. That is, January to January, February to February, ...December to December. I used the last day of each month in the comparison as explained in Background and Methodology.

Here's what I found.

Up moves48%43%43%39%37%36%41%39%26%44%43%48%
Down moves14%16%13%14%17%21%14%16%22%9%17%9%

For example, I found that when January closed the month higher, the Dow also closed higher 12 months later (not 11, as in the previous test) 48% of the time. September is the worst month at predicting the following upward close a year later, with just 26% of predictions correct. January and December tie for the best prediction rate: 48%.

Similarly, when January closed the month lower, the Dow also closed lower 14% of the time. The best performing month for downtrends is September. That's no surprise because September closes lower most often.

Combining the two rows we can says that the Dow follows January's trend 62% of the time, the best of the bunch. November comes in second with 60%.

The worst prediction comes from September with just 48% seeing the Dow follow September's direction 12 months later.

-- Thomas Bulkowski


See Also

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. From Stephen Wright: I'm writing a book. I've got the page numbers done.