Thread: This Month in Stocks January: 12/28 - 02/01/2008

OSM and futures just popped on the news.

Jobs -17K expected 70K

Everything is FINE keep buying! The Gov. will fix everything. Spend, spend, spend! LOL

The January Barometer

Last Update: 31-Jan-08 13:32 ET

The Stock Trader's Almanac is full of insightful observations about the stock market's behavior. One observation, though, that many investors might not be too keen about hearing is the so-called January Barometer.

According to The Stock Trader's Almanac, the January Barometer states that as the S&P goes in January, so goes the year. Yikes! As of this posting, which is being made on the last day of January, the S&P 500 is down 7.1%.

The good news for readers is that the barometer doesn't have a perfect track record. The bad news is that it has registered only five major errors since 1950 - in 1966, 1968, 1982, 2001 and 2003.

Might 2008 be a period that ends up being recorded as a "major error?" If Briefing.com's forecast for a 2% to 4% gain in the S&P 500 this year pans out, then it would not. The Almanac characterizes a gain of +/- 5% as "flat" as opposed to a "major error" versus the January reading. Incidentally, when these flat years are included, the success rate of the barometer drops to 75%.

At this juncture, a 2% to 4% gain must sound pretty good to many readers given the S&P's current standing and considering the tremendous volatility we have seen to start the new year.

The volatility has been a function of changing expectations on the economy, Fed policy, financial sector reports, and market leadership.

The volatility is expected to persist for the time being, yet we continue to stand by our forecast given the salutary effects of the Fed's rate-cutting action, the impending arrival of fiscal stimulus, the prospect of a turn in financial sector earnings in the back half of the year, and conceivably, some stabilization in the housing market that will lessen the drag on GDP. Separately, the stock market remains attractively valued as evidenced by an earnings yield of 7.0% versus the 10-year note yield of 3.60%.

Our view doesn't mean the market won't trade lower from current levels. It might. When the final number is registered, though, we think it will show that the January Barometer wasn't as accurate as many investors may now be fearing.
--Patrick J. O'Hare, Briefing.com

And this is why the Fed cut the rate a additional .50%, because they knew what the jobs numbers were going to come in at.

And, just for insurance, knowing that the jobs number would be the worst in 52 months, do you think Bernanke, (or even Dubyah) gave Bill Gates a call and asked him to make some good news today to overshadow the jobs report? "C'mon Bill, take one for the team, the market will tank when this jobs number comes out".

Hey, it is just a offer. Nothing more.