With the sharp selloff we’ve seen to far in February, this is a really intriguing note from BTIG’s Dan Greenhaus, about the odds that the market never falls below its January lows for the rest of the year.
With the S&P 500 gaining by over 5% in January, yet still hovering around 1,500 in the face of a meaningful pickup in bullish sentiment despite today’s selloff, we wondered yet again whether January usually provides the low for the year. It certainly does happen; since 1970, a day in January was the absolute low for the S&P 500 roughly 37% of the time including each year from 1995 through 1999 (see table below). However, since 2000, January has been the low just once, in 2012, and one could have bought the index last year at basically the same price on June 1st as on January 1st. Further, each year of the recovery — 2010, 2011 and 2012 — saw a meaningful equity declines of at least 10% and in two cases, nearly 20%. So given the internal “concerns” we’ve been highlighting we’ll stick with our “pause” thesis. At some point, we’ll be ready to press “play” again but not before further excesses diminish.
Here’s his table. Since 2000, only last year saw the lows of the year happen in January. And as he notes, there’s been a big decline midway through every post-recovery year.
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