Olivia Pratt
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How the Dow performs in January is more important than you know


Index’s performance in January may be a harbinger for the rest of the year.

With three more trading days remaining in January and the Dow Jones Industrial Average down roughly 2% year to date, it’s still uncertain whether the index will muster enough of a rebound to close out the month in positive territory.

But how the blue chip index performs in January may have a greater bearing on the direction of the Dow DJIA, -1.65% for the remainder of the year than expected, according to the number crunchers from The Wall Street Journal market data group.

-- January’s performance has predicted the outcome of the full year in 87 of 117 years.

-- When the Dow fell in January, it closed out the year lower 60% of the time. 2014 was among the exceptions as the index fell in the first month but finished the full year higher.

-- January as a predictor is more reliable when it is an “up” month, with the Dow finishing higher for the year 82% of the time when it ends January in the green.

-- In eight of the past 11 years, the Dow repeated its January trend for the year.

The data covers 117 years, except 1914 which was excluded due to a significant changes in components of the index.

Sue Chang