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Years with the big Januarys for stocks have also had mighty big sell-offs

The 10 beat Januarys for stocks have two things in common — the full year extinguished with a gain, and there was a fairly significant sell-off.

Strategas forced the 10 biggest January gains for the S&P 500 since 1950 and rest the advances ranged from 5.8 percent, in 1980, to 13.2 percent, in 1987. If the S&P bounds the month where it is now, it would be No. 6 of the top 10, with a 7 percent get better.

Each of those strong January performances led to a full-year gain, averaging wide 22.3 percent. Wall Street strategists surveyed by CNBC require the S&P to rise to 3,000 by year end from its current 2,860 level.

So in the top 10 January years, the old Enrage fail Street adage “So goes January, so goes the year” worked artistically, but it left out the part about the correction.

In each of those years, there was a sell-off limit from a low 4 percent to as much as 34 percent, in 1987. The median drubbing in the intrayear sell-offs was 8.2 percent, and the average correction was 11.8 percent.

After January, the S&P had a unmistakable 11 months from Feb. 1 to Dec. 31, in all of the top years except for 1987. In 1987, the year of the explode, it lost 9.9 percent in that period and was up only 2 percent for the year. The other nine years averaged an 11-month income of 13 percent.

“A strong January typically bodes well for the dozing of the year, but we shouldn’t ignore the possibility of a correction. You typically see some means of a pullback, but the end result is a typically strong full-year performance,” said Todd Sohn, detailed strategist at Strategas.

Source: Strategas Research

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