Another anomaly that can be investigated empirically, even if it is not justified by any logical reason, is the January barometer effects.
Some research argues, regarding S&P 500, that:
- a positive January is usually associated to a positive year, instead
- a negative January is a predictor of a negative year.
T.Levy and J.Yagil In their paper “Seasonal patterns and calendar anomalies in the commodity market for natural resources” wrote:
“According to Cooper et al. (2006), the other January effect, sometimes known as the “January barometer”, is related to the documented observation that stock market performance in January predicts market returns over the following 11 months. This effect predicts that if the January returns are positive, the returns for the next 11 months will be positive as well, but if January concludes with negative returns, the returns in the following 11 months will be negative as well.
For commodities, the returns for the 11 months following a January which has been:
- a positive: tend to be positive, but statistically insignificant.
- a negative: also are no different from zero.
They conclude with:
The only significant result is the relatively high number of positive January months for:
- silver (20 vs. only 12 negative Januarys),
- platinum (23 vs. 9) and
- palladium (25 positive Januarys vs. only 7 negative Januarys).”
The conclusion evidence written in the paper belongs to the Month of Year effect, not to January-Barometer. In MOY effect it has been demonstrated how precious metals price have been strong in the month of January since 1970.
While January-Barometer seems not to produce statistically significant results.