January, historically an important month for the markets.

January is usually an important month for markets as it is often the case that as January goes so does the rest of the year. 

Data below is for the US markets.

Market Watch reports:

Since the late 1800s, when the Dow Jones Industrial Average was created, it has gained ground in 63% of the Januarys. The comparable proportion for all other months of the calendar. in contrast, is 57%.

Largely on the strength of these increased odds, the average January gain for the Dow since the late 1800s has been 0.9%, in contrast to 0.6% for all non-January months.

It goes on.

Since the late 1800s, an “up” January has been followed by an “up” rest of the year 67% of the time. The comparable percentage for a “down” January, in contrast, is 55%. The difference in average 11-month returns is 8.3% (follow an “up” January) vs. 4.2% (following a “down” January).

http://www.marketwatch.com/story/how-special-is-january-2013-01-02?link=MW_story_insert

If January is a very good month then the rest of the year often follows suit.

Since 1970, there has been 13 times when the US market has been above 3.75% in January. Every time the index completed the year with a substantial gain.

The 13 Januarys with returns of 3.75% or greater were in 1971, 72, 75, 76, 79, 83, 85, 87, 88, 89, 91, 97 and 99.

The average gain for the rest of the year was a surprising 19.6%.

http://www.marketoracle.co.uk/Article32875.html

While there is a need to be weary of such stats in that there is no guarantee that history will always repeat, it is worth noting as part of an investment/trading strategy that some months do tend to see better performance than others and as with behaviour in general, the markets often repeat what they have done before. It will be interesting to see how long and how much of a positive Fiscal Cliff sentiment carries on into the new year.