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The New Year Rally: 3 Stock Trends Signal a Bullish 2020

The New Year Rally: 3 Stock Trends Signal a Bullish 2020

Article Highlights:

  • Three major stock trends have the potential to send stocks soaring in 2020.
  • When all three trends align, they have a 90% win rate in predicting a bullish rally for stocks over the next year.
  • You can learn more about my proven system for trading seasonal stock trends like these right here.

Back in November, I told you all about the Santa Claus Rally. That’s the period between Christmas and the first two days of the new year in which stocks typically climb.

This rally is just one part of a whole trifecta of profitable market trends that last from December to January.

They’re three of the most powerful tools for investors — and when you combine them, they form one of the most accurate views on the market for the next year.

Today, I want to tell you all about the final two pieces of this winning combination.

Most people like to make bold predictions about the new year based on major market trends and key stocks set to soar. Those are great factors to watch.

But I’m a numbers guy, and numbers change.

So until we get into the new year, my insights will adjust with the changing pulse of the markets.

And in order to get the best sense of how the markets will fare, I look at these three simple trends.

I’ve analyzed years of data behind them. And I’ve come to one conclusion: When all three align, they have a 90% win rate in predicting a bullish rally for stocks.

I gave you the first piece of the trifecta. Now, I’ll take you through the final two pieces of this powerful set of indicators.

2 More Bullish Signals for 2020

The “First Five Days indicator” and the “January Barometer” are two of the most powerful trends for investors to watch.

Both carry significant weight in their own right. But when you combine the data from all three trends, they show we have a better-than 90% chance at seeing a profitable stock market in 2020.

Here’s how they work.

The first five days of January act as a barometer for the month and the year ahead.

If stocks are up over the first five days, this typically indicates a positive return for the year at least 82% of the time. A seemingly small amount of data gives us a major indication about the entire year.

If the Santa Claus Rally is positive, the First Five Days will also be positive.

And that brings us to the final piece of the trifecta — the January Barometer.

Investors and analysts alike consider it the single most important month for predicting the full year’s returns.

And they have history to back this up.

The January Barometer has successfully predicted the direction of the S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index nearly every year since 1934. There were only nine anomalous years over that same period.

That still hands us a 76.9% accuracy rate!

The trifecta lets us improve those win rates to more than 90%.

Watch my video below to learn why the trifecta is so powerful at predicting positive returns.

The New Year Trifecta

All three trends form an accurate picture of the stock market’s next big moves.

And they’ve predicted positive returns on 31 occasions since 1950. Out of those 31 occasions, only three years failed to produce a positive return.

That gives this phenomenon a win rate of 90.3%! And of those 31 times when we saw the market hold higher, it has produced an average return of 14.5% after the month of January.

That’s a double-digit gain in 11 months of the year on average!

This is huge. For the January Barometer to work, the year simply needs to stay in positive territory.

But the trifecta calls for a double-digit rally with a 90% accuracy rate if all three trends are triggered.

We saw this exact same pattern play out in 2019.

The Santa Claus Rally was positive with a 4% gain over the six-day period. The first five days of January 2019 notched a 2.7% return. And January was up nearly 8%.

All three time frames positively triggered the trifecta.

Since the end of January, the stock market has surged more than 17%. That’s right in line with the expected double-digit returns after hitting the trifecta.

I’ll be tracking these developments heading into the new year. And we’ll let the data dictate our expectations for 2020.

Now, I never invest based just on my gut reactions. I follow proven seasonal trends like the anomalies above to pinpoint the ideal times to get in and out of trades. If you want to learn how I use these trends to tap into stock market gains, click here to learn more.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert

P.S. Check out my YouTube channel and click on the subscribe button. That way, you won’t miss any of the content I post on how to make money in the stock market and how to be a better investor. I just posted the latest episode of my new series, Bank It or Tank It, which you can watch right here.

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