The S&P 500 is off to its best start in many years, a bullish technical signal since the so-called January Barometer has a decent track record for predicting full-year gains for stock exchange traded funds.
Furthermore, cyclical sectors and related ETFs are leading the market, which shows risk appetite is strong despite lingering concerns over Europe’s debt crisis.
The iShares S&P 500 Index Fund ETF (NYSEArca: IVV) is up about 5% for the month of January.
The January Barometer has worked eight out of the last eight presidential election years. Historically, the S&P 500 has gained for the year after rising in January, with an average positive calendar year advance of 16%. [Stock ETFs in Election Years]
The S&P 500 is on track for its best first month start since 1997, rising 4.7% for the first 27 days of the year, which is already above its January average gain of 1.1% since 1945, Sam Stovall, Chief Equity Strategist at Standard & Poor’s, wrote in a research note.
Additionally, the S&P MidCap 400 and SmallCap 600 Indices have jumped 7.2% for the same period, while the S&P Global 1200 Index recorded a 5.8% increase.
On a sector-by-sector basis, utilities, last year’s best performing sector, is this year’s worst sector, dropping more than 1% in all four indices, with a 3.6% decline in the S&P 500. Additionally, both consumer staples and telecom services are lower in the S&P Global 1200 and 500. [Worst to First: Financial, Materials ETFs Lead Market]