Over the past two decades, the S&P 500 Index has been unchanged, on average, in January with results equally split between gains and losses.

Stock Market Outlook for January 2, 2024

Over the past two decades, the S&P 500 Index has been unchanged, on average, in January with results equally split between gains and losses.

Real Time Economic Calendar provided by Investing.com.

*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.

Stocks Entering Period of Seasonal Strength Today:

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ProShares Online Retail ETF (AMEX:ONLN) Seasonal Chart

VanEck Vectors Oil Services ETF (NYSE:OIH) Seasonal Chart

Riley Exploration Permian, Inc. (AMEX:REPX) Seasonal Chart

Patterson Dental Co. (NASD:PDCO) Seasonal Chart

Falcon Oil & Gas Ltd. (TSXV:FO.V) Seasonal Chart

Northrop Grumman Corp. (NYSE:NOC) Seasonal Chart

Office Properties Income Trust (NASD:OPI) Seasonal Chart

Boxlight Corporation (NASD:BOXL) Seasonal Chart

iShares Edge MSCI Minimum Volatility EAFE ETF (AMEX:EFAV) Seasonal Chart

Invesco Tactical Bond ETF (TSE:PTB.TO) Seasonal Chart

The Markets

Stocks slipped slightly into the final session of the year as portfolio managers concluded their year-end transactions, setting portfolios up for the new year ahead. The S&P 500 Index closed down by just over a quarter of one percent, continuing to knock on the door of the all-time high charted two years ago at 4800. Momentum indicators are increasingly rolling over from overbought territory charted through the middle of December with MACD crossing below its signal line. Momentum indicators continue to maintain characteristics of a bullish trend above their middle lines, but there are signs of upside exhaustion here, which shouldn’t be too much of a surprise following the phenomenal run off of the October low. The Santa Claus rally period stretches into the first few days of the new year, following which a softer period for equity market performance begins and it would not be surprising to see some digestion of prices beyond the first week of January. Points of support below the market remain plentiful, including previous resistance at 4600, along with rising major moving averages. The risk-reward is still not favourable to be adding new money at these heights, but you certainly do not want to be sellers of risk (stocks), yet. A time may come through the first quarter of the year when reducing risk may prove to be prudent, but, for now, sticking with the rising intermediate-term trend is appropriate.

Today, in our Market Outlook to subscribers, we discuss the following:

Monthly look at the large-cap benchmark

The average performance of the S&P 500 Index for January

Investment manager exposure to stocks and the market bordering on complacency

Commitment of traders for S&P 500 Futures rolling over again

Managed money is still very bearish on the bond market

Two areas of the market showing “high potential” charts heading into the new year

Securities that have gained or lost in every January over their trading history

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For the month ahead, based on the past two decades, the first month of the year has typically been one to mitigate exposure to risk, particularly in areas of international exposure (see our Monthly Outlook for January). The S&P 500 Index has been unchanged, on average, in January with the frequency of gains and losses equally split. The 8.9% decline recorded in January of 2009 is a significant burden on the average result. On the flipside, the best return for the start of the year was realized in 2019 when the benchmark gained 7.9%. Losses tend to accumulate following the Santa Claus rally period that wraps up in the first week of the month.

Just released…

Our monthly report for January is out, providing you with everything that you need to know heading into the month(s) ahead.

Highlights in this report include:

Equity market tendencies in the month of January

Rebound in stocks being fueled by an injection of liquidity in the market

Credit Conditions Improving

Equity Market performance during Election Years

Average performance of stocks during recessionary years

Struggling loan activity

Retail Employment showing the weakest November change since the Great Financial Crisis

Consumer Spending: Retail Sales

Inversion of the yield curve

Bond Market

How Low can the yield on the 10-Year Treasury Note go

The tendency for Bond Yields during Election Years

Notable shift in the inflationary backdrop heading into the end of the year

Average path of Consumer Prices during Election Years

Election Year tendency for Gold

Equity Market Breadth Expansion

REITs

US Dollar

Our list of all segments of the market to either Accumulate or Avoid, along with relevant ETFs

Positioning for the months ahead

Sector Reviews and Ratings

Stocks that have Frequently Gained in the Month of January

Notable Stocks and ETFs Entering their Period of Strength in January

Subscribers can look for this 109-page report in their inbox and, soon, in the report archive.

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With the new month upon us and as we celebrate the release of our monthly report for January, today we release our screen of all of the stocks that have gained in every January over their trading history. While we at Equity Clock focus on a three-pronged approach (seasonal, technical, and fundamental analysis) to gain exposure to areas of the market that typically perform well over intermediate (2 to 6 months) timeframes, we know that stocks that have a 100% frequency of success for a particular month is generally of interest to those pursuing a seasonal investment strategy. Below are the results:

And how about those securities that have never gained in this first month of the year, here they are:

*Note: None of the results highlighted above have the 20 years of data that we like to see in order to accurately gauge the annual recurring, seasonal influences impacting an investment, therefore the reliability of the results should be questioned. We present the above list as an example of how our downloadable spreadsheet available to yearly subscribers can be filtered.

Sentiment on Friday, as gauged by the put-call ratio, ended close to neutral at 0.99.