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The Strongest January Since 1987 Lifts U.S. Stocks

Louis Navellier profile picture
Louis Navellier
3.98K Followers

Summary

  • This January was the strongest in 32 years, especially for small-capitalization stocks, which had their strongest start in over 40 years.
  • I believe that companies which continue to surprise and guide higher, like Boeing, will continue to be market leaders.
  • In other words, China’s economic slowdown, Brexit, and other global events are now influencing the Fed.

The S&P 500 rose 2.34% last week, nearly 8% in January, and 15% since Christmas. This January was the strongest in 32 years, especially for small-capitalization stocks, which had their strongest start in over 40 years. Despite this strength, the market initially got up on the wrong side of the bed last week after some big companies warned that sales were slowing down, mostly due to a lack of demand from China.

DollarYuan.jpg

Complicating matters further for these multinational companies is the fact that the U.S. dollar remains strong, while the Chinese yuan and most other currencies remain weak, so when multinational companies are paid in eroding currencies, they all too often have to issue revenue warnings. The eurozone’s growth is now increasingly precarious. Since approximately 50% of the S&P 500’s sales are generated outside of the U.S., I expect more multinational companies to issue revenue warnings in the upcoming weeks.

Fortunately, some multinational companies are prospering. For example, on Wednesday, Boeing (BA) posted a substantial earnings surprise and provided positive guidance. So far, fourth-quarter results for S&P 500 stocks are running at an annual sales gain of 7.4% and annual earnings pace of around 13%. I believe that companies which continue to surprise and guide higher, like Boeing, will continue to be market leaders.

Navellier & Associates owns BA in managed accounts and a sub-advised mutual fund. Louis Navellier and his family do not own BA privately.

“As January Goes, So Goes the Year”?

With January up 8%, the saying “as January goes, so goes the year” is obviously a good omen. Between 1950 and 2017, the January barometer has been correct 58 of 67 times (about 87%), according to The Stock Trader's Almanac. However, I still expect market leadership to become increasingly narrow in the upcoming months, simply because earnings momentum

This article was written by

Louis Navellier profile picture
3.98K Followers
Navellier & Associates was founded by Louis Navellier in 1987 and since then has guided thousands of investors by applying our disciplined, quantitative investment process to a broad range of equity products. Every day, investors hire Navellier to manage their assets in a private account, mutual fund, or defensive portfolio. For over 25 years, we’ve been zeroing in on opportunities for long-term growth. We employ a veteran team of investment and client service professionals who deliver exceptional, personal service and industry-leading information to our clients. _________________________________ Important Disclosures that Accompany Navellier & Associates Articles: *Navellier may hold this security in one or more investment strategies offered to its clients. None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings. Graphs are for illustrative and discussion purposes only. Although information has been obtained from and is based upon sources Navellier believes to be reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. All opinions and estimates constitute Navellier's judgment as of the date of the report and are subject to change without notice. This report is for informational purposes and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. Any decision to purchase securities mentioned in this research must take into account existing public information on such security or any registered prospectus. Past performance is no indication of future results. FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

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Comments (2)

jprizzuto profile picture
this was brilliant louie..."I believe that companies which continue to surprise and guide higher, like Boeing, will continue to be market leaders."
r
Strongest Jan since 1987 due to a ‘pausing’ Fed (? 2 hikes in 2019). But what happened in Oct 1987?
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