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The “five-day rule” implies that the US stock market’s probability of closing this year is 80%.

January 11, 2019 20:30
source: FXStreet

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Do you understand the "five-day rule"?

After the disaster years that fell into the technical bear market last year, this year's US stocks may be welcoming two great aspirations - the first five days of the rise and the third year of the US presidential term!

Don't take it for the two reasons mentioned above, because they all have solid historical data.

The data show that since 1957, the S&P 500 index has risen in the 41 years of the first five trading days in January, and eventually closed 33 times in the same year.

  The success rate of the “five-day rule” is 80%.

As of Tuesday's close, US stocks closed up in the first five trading days of the new year, and the S&P 500 index rose 2.6% to close at 2,574. In this regard, Jeff Hirsch, editor-in-chief of the stock market trader's yearbook, said: "The positive behavior of investors and traders at the beginning of the year indicates that the market and economic data are good."

  The success rate of the increase in January was 86%.

The upswing in the first five days of January is a good start and a barometer of the market or a predictor of market performance. A close in January means that it will close in a year. This is what Wall Street proverb means "how to do in January, how to do it in a year." In the past 37 January, 32 months have been closed, with a success rate of 86%.

  In addition to this effect, this year the market will enter the third year of US President Trump’s term of office.. According to historical statistics since 1928, the third year of the US presidential term is often the most powerful year for the four-year term of Chinese and US stocks, with an average increase of more than 13%.

It is not difficult to find a reason behind this law. In a sense, the annual cycle of the presidential election has a subtle influence on US stocks. In order to be re-elected, politicians will do their best to even control the economy. In the third year of the re-election, the year before the re-election, it is often the time when they need to hand over their economic transcripts!

(Article source: FXStreet)

                (Editor: DF506)

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