The January Barometer is a market adage that says, "As January goes, so goes the year," which suggests that the first month of the year has a way of foreshadowing the calendar year results.

We’re now about halfway through January and thus far the market has gotten off to a decent start; year-to-date (through 1/14) the S&P 500 (SPX) is up 1.18%, which, coincidentally, almost even with last year when the index was up 1.16% through 1/15. If you've kept up with our report over the years, you're probably familiar with the old market adage, "As January goes, so goes the year," which suggests that the first month of the year has a way of foreshadowing the calendar year results.  

The idea is that if January brings a gain for the market, the rest of the year will follow suit and end in positive territory. If the market is down in January, the adage warns a loss for the year is likely. The adage has held true for the last four years.  In 2022, the S&P 500 (SPX) finished January down more than 5% and went on to lose more than 19% for the year. In 2023, SPX gained more than 6% in January and followed through to finish the year up more than 24%. SPX finished January 2024 with a gain of 1.6% on its way to another gain of more than 20% for the year. And last year, the index gained 2.7% in January and finished the year up 16.4% The prior two years bucked the trend as the S&P posted a loss in January but went to finish both years with strong gains; SPX was down -0.16% in January 2020 and -1.11% in January 2021 but ended the year with gains of 16.26% and 26.89% in 2020 and 2021, respectively. There is research to support the January bias using historical data going back to 1950, and we have outlined some of the more relevant bullet points below.

January Barometer Stats: 

• When the S&P 500 is positive in January, it recorded a gain for the full year 89% of the time.
• The “barometer” has been more accurate predicting up years than down years. When the S&P 500 is down in the month of January, it has finished down for the full calendar year 50% of the time.
• The barometer has been "right," either to the upside or downside, almost 74% of the time.
• There have been 12 "really wrong" years, in which the SPX has logged a gain or loss of more than 5% in the opposite direction of January's return.
• The average return for years starting with a positive January is +16.9% for the year.
• The average return for years starting with a negative January is -1.74%.

While the adage has an attractive success ratio, it is certainly not fail-safe. In fact, 7 of those 12 years where the barometer has been "really wrong," have occurred since 2009, including 2014, 2016, 2018. 2020, and 2021. In 2018, SPX started strong, gaining 5.82% in January, but finished the year down more than 11%. Back in 2016, SPX fell more than 5% in January, the seventh-worst January on record since 1950, before rallying to finish the year with a gain just shy of double digits. Other large discrepancies between January and full-year returns occurred in 2009, 2010, and 2014.  

It is worth noting that nine of the 12 times the barometer has been “really wrong” were instances when SPX had a negative January return but went on to post solid gains for the year; there have been only three occasions since 1950 when SPX logged a gain for January and went on to lose more than 5% for the year. With the S&P in the green thus far in January, the early signs point to a positive 2026.

The image below shows the past 76 years (excluding the year-to-date 2026 entry) of data for the January Barometer. Keep in mind that these historical tendencies are just that, tendencies, and should not serve as a primary indicator for anyone looking to tactically manage market risk. If you are interested in reading more about the January Barometer concept, other month's "barometer" capabilities, and how the theory applies to the Dow Jones and Nasdaq Indexes, you can review this piece published by stocktradersalmanac.com.