Is The "First Of The Year" Market Surge Pattern About To Break?
A few days ago Goldman pointed out an interesting observation: "if you were an index investor and weren’t long Jan 1st, you underperformed this year." To be sure, index investors have been well aware of this self-fulfilling prophecy. As it turns out, one can extend this pattern not only to 2013 but virtually every year in the Fed's centrally-planned "abnormal", as can be seen on the chart below: adding up the performance of just the first trading day of the year in the S&P shows a total outperformance of 10% across the past five years.
So with the EURUSD futures, at least for now, indicating a very unfamiliar shade of green it may be that for the first time under the Fed's reign this most familiar self-fulfilling prophecy may be about to predict an unhappy ending. And if so, what other pattern-busting surprises are in store in the new year?
Then again, in a record illiquid market where an oddlot of E-minis can push the S&P higher by 5 points, it may be prudent to wait until the closing print before counting one's chickens.
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