Last year I showed how the SPX has performed after the first day of the year was positive. Often you see a couple more days of upside followed by a selloff. In fact, there has been quite a streak of January dips after strong first days. Below are the last 10 instances going back to 1988, and their 13-day returns.
Most instances showed a decent amount of runup prior to the market rolling over. In fact the last five instances, starting in 2002 and ending in 2010, all saw the market rise 1%-3% before the move down ensued.
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I have traded professionally since 2001. From January 2003 through February 2007 my bi-weekly column "Rob Hanna's Putting It All Together" appeared on TradingMarkets.com. I have been conducting quantitative research and designing trading systems - mostly focused on short-term edges since 2004.
Rob Hanna
