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January Indicator Trifecta Crushing All Other Patterns & Indicators–S&P 500 2776 By Yearend?

As of today’s close, DJIA is up 4.96% year-to-date, S&P 500 is up 5.65% and NASDAQ is up a strong 8.97%. The market shrugged off typical weakness before and after Presidents’ Day and appears to be even skipping typical weakness seen during a new administration’s first 100 days in office. This strength and resilience is noteworthy as it does appear in one pattern, the pattern of past years that also had a positive January Indicator Trifecta

In the following charts 2017 is compared to all past Post-Election Years, all past January Trifecta years and past Post-Election Years that also had a positive January Trifecta. 2017 DJIA and S&P 500 performance has (or very nearly) caught up with the bullish positive January Trifecta pattern while NASDAQ is actually exceeding past averages. Taking the most bullish of these patterns, past Post-Election Years with a positive January Trifecta, and applying them to current market levels results in some rather large numbers by yearend; DJIA 23940, S&P 500 2776 and NASDAQ 6804.

Back in December we released our Annual Forecast for 2017 and laid out three scenarios; worst case, base case and best case with probabilities attached to them. Worst case was a mild bear market with a 5% chance. Base case was for continued tepid economic growth and single-digit to low double-digit gains, 65% chance. Our best case of 20% plus gains, based upon an acceleration of growth, tax reform, healthcare reform and infrastructure buildout, had a 30% chance. The longer the market keeps making new all-time highs, the better the odds are for the best case scenario to play out, but we still await signs of and confirmation of acceleration in growth, tax and healthcare reform and infrastructure buildout.