The saying “As stocks go in January, so goes the year” is a common one we hear, especially as a new year rolls around. Since 1950, this has been true about 58% of the time. If you go back further, however, it doesn’t hold any statistical significance and therefore is not a great predictive indicator.
Having dispelled the myth, on with some facts. The S&P did end down 3.6% in January while the Dow was down just over 5%. December’s Hindenburg Omen indicated that a there is a 75% chance that stocks would correct 5% with a 25% chance that a crash of 15-20% may be in the works during the first quarter of 2014.
The weekly ES has corrected back to the MTPredictor wave 4 support area while the daily charts have completed wave 3 down from their wave 5 highs. If we don’t see more selling early in the week to take us into the daily wave 4 Decision Point support, then we should get a rally off this current wave 3 target level into the wave 4 resistance.
Silver has begun to roll over again but has not yet taken out the prior weekly swing low below 19. If it can, then we may get that last push down to the wave 5 target at 17.50.
Check out the rest of the analysis in tonight’s MTPredictor Weekly Market Update featuring the MTPredictor Elliott wave and Fibonacci trading software for stocks, commodities, futures and forex.