Stocks climb in the ‘first five days’ indicator, sending bullish signal for 2020

By Yun Li

  • Stock Trader’s Almanac found that the first five days have a good track record of predicting market performance for the whole year.
  • When stocks finish that period higher, the S&P 500 has been positive 82% of the time at year-end with an average gain of 13.6%.
  • Stocks finished the first five trading days of 2020 higher, with the S&P 500 rising nearly 0.7%.
  • It wasn’t all smooth sailing, however, as an escalation of U.S.-Iran tensions during the period spooked investors.

Stocks finished the first five trading days of 2020 higher, setting up for potentially strong performance in the full year, based on an old Wall Street indicator.

If stocks perform well in the initial couple of sessions in a given year, the market is often up at year-end, according to the “first five days” rule.

Stock Trader’s Almanac, which studied the market phenomenon going back to 1950, found that the first five days have a good track record of predicting the whole year. When stocks finish that period higher, the S&P 500 has been positive 82% of the time at year-end with an average gain of 13.6%, according to Stock Trader’s Almanac and CNBC calculations.

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