January's Prediction Record, Soaring Materials And The "Not Too Hot" Streak

This is an abridged version of our Daily Report.

So goes January…or August

A popular rule of thumb suggests that how stocks start a New Year means something for the full year. It correctly predicts the return over the next year about 60% of the time.

That’s likely a statistical fluke, and other weeks have just as good, or better, predictive record.

Material momentum

A rally in Materials stocks over the past couple of weeks has driven most of them to 52-week highs. For the first time since 2007, more than half the stocks in the sector reached a new high together.

Since 1990, that has been a signal of buying exhaustion.

The not-too-hot uptrend has ended

The S&P went more than 380 days above its 200-day average, but not more than 10% above it.

For the first time ever, that kind of streak ended with a move to the upside. The only two time periods that had a similar streak ended with a move below the 200-day.

Payroll report

Since 2014, when the S&P closed at a new high on the day of the Nonfarm Payroll report, over the next week it added to its gains only 22% of the time.

The latest Commitments of Traders report was released, covering positions through Tuesday

“Smart money” hedgers are still heavily long the agriculture contracts that make up the DBA fund.

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The post titled January's Prediction Record, Soaring Materials And The "Not Too Hot" Streak was originally published as on SentimenTrader.com on 2018-01-08.

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