S&P 500 Gained 21.1% in Midterm January Indicator Trifecta Years

Midterm elections years have a tepid history since 1950, but when all three of our January indicators (Santa Claus Rally, First Five Days and full-month January Barometer) were positive the next eleven months and full-year market performance was significantly above average. Last year, was the most recent year the January Trifecta was positive and the market delivered. In past midterm years since 1950, S&P 500 has averaged a full-year gain of 6.7%, but when the January Trifecta was positive in midterm years, the average full-year gain swelled to 21.1%.

Since 1950 there have been 17 midterm years of which 5 years had a positive January Trifecta, 1950, 1954, 1958, 1966 and 2006. The January Trifecta record is not perfect as 1966 was negative and the market did suffer a minor bear market (S&P 500 down 22.2% peak to trough). Vietnam and tightening money supply contributed to losses in 1966.