The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

In The Stock Market Calendar, What Is The January Barometer And January Effect ?

The January barometer is a statistic from "The Stock Traders Almanac" reflecting, with 85-90% accuracy, that the overall stock market rises in a year when the Standard and Poors is up in the month of January and drops when the index for that month is down. The January effect refers to the historical pattern that stock prices rise in the first few days of January. Studies have suggested this holds only for small capitalization stocks. In recent years, there has been less evidence of a January effect.

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