Quantum BiasStock Market Prediction: Does January Predict the Whole Year?
One of Wall Street's oldest market predictions, with the years that made it famous and the years that broke it.
In this article
Not as a prediction you can count on. From 2000 to 2025, January's direction matched the direction of the rest of the S&P 500's year in 15 of 26 years. After an up January, February to December rose 11 times out of 13. After a down January, it still rose 9 times out of 13, including some of the best years of the period, like 2003, 2009 and 2021. A down January wasn't a reason to expect a down year.
| Question | Data | Answer |
|---|---|---|
| Does January's direction predict the rest of the year for the S&P 500? | SPY total return, 2000–2025, 26 years | Same direction in 15 of 26 years; the rest of the year rose after 9 of 13 down Januaries |
The saying and the research
The "January barometer" comes from Yale Hirsch, founder of the Stock Trader's Almanac, who first wrote about it in 1972: as goes January, so goes the year.
The idea has some academic backing. In "The Other January Effect", published in the Journal of Financial Economics in November 2006, Michael Cooper, John McConnell and Alexei Ovtchinnikov studied U.S. stock returns from 1940 to 2003. As Vanderbilt University summed up the study in February 2008, the value-weighted market returned an average of 14.8% over the rest of the year after a positive January, against 2.92% after a negative one.
Later analyses, like the one by Christian Felde cited in Wikipedia's entry on the January barometer, suggest the signal got weaker after the mid-1980s, especially for negative Januaries.
That's why we tested the most recent quarter-century, which the 2006 study didn't cover.
How we tested it
- Market: SPY, total return including dividends.
- January return: from the last weekly close of December to the last weekly close of January.
- Rest of year: from the last weekly close of January to the last weekly close of December.
- Years: 2000 to 2025, 26 full years.
What we found
| Years | Rest of year rose | Average rest-of-year return | |
|---|---|---|---|
| January up | 13 | 11 (84.6%) | +10.4% |
| January down | 13 | 9 (69.2%) | +8.9% |
| All years | 26 | 20 (76.9%) | — |
Exact values from table 2 in this article. Bar lengths share a zero baseline; no new calculation or simulated price path. Read the table and its stated sample and limits in this article.
The up-January side looked good: after an up January, the rest of the year went up in 11 of 13 cases. But the rest of the year went up 77% of the time overall, so "up after up" mostly just reflects the market's normal upward drift.
The down-January side failed. After a down January, the rest of the year still went up in 9 of 13 cases, and the average was only 1.5 points lower than after an up January. Following the saying would have kept you out of some of the strongest years of the period.
Overall, the barometer was right in 15 of 26 years. Calling "the rest of the year will match January" worked 58% of the time. Just calling "the rest of the year will go up", every year, without even looking at January, worked 77% of the time.
The years behind the numbers
| Year | January | Rest of year | Barometer right? |
|---|---|---|---|
| 2003 | −1.5% | +29.5% | No |
| 2008 | −9.7% | −32.9% | Yes |
| 2009 | −5.0% | +37.7% | No |
| 2018 | +7.4% | −11.9% | No |
| 2020 | −0.4% | +18.4% | No |
| 2021 | −1.0% | +30.1% | No |
| 2022 | −7.0% | −12.1% | Yes |
The barometer's famous wins, like 2008 and 2022, were years when a bear market was already going in January. In those years, January didn't predict the drop. It was part of it. Its misses came in two kinds. Most followed small January dips, like −0.4% in 2020 and −1.0% in 2021, that said nothing about the year ahead. The others came at turning points: January 2009 fell 5.0% near the end of a bear market, and January 2018 rose 7.4% right before the year's two corrections.
So January's direction lined up with the year when a trend was already well established, like in 2008 and 2022. When January's move was small, it was noise. And at turning points, like 2009 and 2018, it pointed the wrong way.
Exact values from table 3 in this article. Bar lengths share a zero baseline; no new calculation or simulated price path. Read the table and its stated sample and limits in this article.
Is January even a special month?
We also looked at every calendar month from 2000 to 2026, with the same weekly-close approximation:
| Month | Average return | Share of months up |
|---|---|---|
| January | −0.05% | 51.9% |
| April | +2.07% | 70.4% |
| June | −0.16% | 44.4% |
| July | +1.66% | 77.8% |
| September | −0.78% | 55.6% |
| November | +2.11% | 80.8% |
Over this period, January was one of the weaker months, not a leading one. September was the weakest on average and November the strongest. With only 26 or 27 data points per month, none of these differences is reliable on its own. It's the same data-mining risk we talk about in our weekend effect article.
Why the barometer might have worked, and then stopped
- Information timing. January is packed with year-ahead outlooks, earnings guidance and fund flows, so a strong January may reflect real good news about the year.
- Regimes that last. Bear markets last many months. A January inside a bear market will often be negative, and so will the rest of the year, like in 2008.
- Popularity. Once a calendar rule gets widely known, traders act on it ahead of time, which can weaken it.
The first two suggest January is less a predictor than a sample of the regime the market is already in.
What predicts the year better than January?
Nothing in this data predicts a single year reliably, but two simple baselines beat the barometer. The first is the market's own drift: the rest of the year went up in 20 of 26 years, so "up" was right 77% of the time without looking at January. The second is the trend: the barometer's best calls came when a bear market was already underway, which a trend filter shows you without any calendar rule.
What this means if you trade ES or NQ
- Don't set a yearly bias off January. A down January was followed by a rising market most of the time.
- Look at the regime, not the month. If January is negative because the market is already in a downtrend, a trend filter like the 10-month moving average gives you the same information without the calendar.
- Treat seasonal tables as background. They describe averages over a few dozen years, while your daily read should rest on the evidence you have that morning.
How to check it yourself
- Take monthly closes of the S&P 500 or SPY for as many years as you can.
- Compute January's return and the February-to-December return for each year.
- Count how often the signs match, and compare that with how often the rest of the year went up anyway.
- Split the sample before and after 1985, and after 2000, to see how the result changed.
Limits
- Twenty-six years. Too few to measure a calendar effect reliably.
- Weekly-close approximation. Month boundaries are approximated by the last Friday close of each month, which can be a few days off from the true month-end.
- One index. We didn't test the Nasdaq-100 or other markets here.
How we did it
- SPY weekly adjusted prices (dividends included) from Alpha Vantage (
TIME_SERIES_WEEKLY_ADJUSTED), through October 9, 2026; monthly values are the last weekly close of each month.
Sources
- Cooper, M. J., McConnell, J. J., & Ovtchinnikov, A. V. (2006). The other January effect. Journal of Financial Economics, 82(2), 315–341.
- Vanderbilt University. (2008, February 8). Vanderbilt research confirms: January returns are consistent predictor of expected economic performance [News release]. news.vanderbilt.edu
- Hirsch, J. A. (2007). Stock Trader's Almanac 2007. Wiley. Cited for the 1972 origin of the January barometer in: Wikipedia. January barometer. en.wikipedia.org. Accessed October 12, 2026.
- Alpha Vantage. TIME_SERIES_WEEKLY_ADJUSTED (SPY). Data retrieved October 2026.
FAQ
What is the January barometer? The idea that the stock market's direction in January predicts its direction for the rest of the year.
Can January predict the stock market for the year? On the S&P 500 from 2000 to 2025, January's direction matched the rest of the year in 15 of 26 years, less often than just assuming the market would go up.
What happens after a down January? In our sample, the rest of the year still went up 9 times out of 13, with an average gain of 8.9%.
What's the best month for the S&P 500? From 2000 to 2026, November had both the highest average return and the highest share of up months in our data, but the sample is too small to rely on.
Research and education only. Not financial advice. Past results do not predict future returns.
How this article was made: drafted with AI assistance from public data and the sources listed above; facts and figures checked by Gabriel Décarie and Karel Panneton.
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