Markets started the year strong - January 16, 2019

Markets started the year strong

Stock markets had their best year kickoff since 2006. Dow Jones Industrial Average, S&P 500, and Nasdaq all started with a hike in their first 10 days of the year. We compared the data for this period between 2006 to 2019 to see how stocks usually perform at the start of the year. So far, 2019 is a success and still seems to be a great year to invest.

Just days after we finished our post about how this might be the year for investing, MarketWatch broke the news about how „The stock market just got off to its best start in 13 years”. Let’s see the details!

Markets are up so far

As MarketWatch gathered the data, Dow Jones Industrial Average gained 2.89% so far this year, which is “the best first seven days to a year since 2006, when stocks burst 3.04% higher over the same period”. The S&P 500 also has a great time so far this year: it has returned 3.58%. That’s close to its best start since 2006, which was a 3.68% gain. The same is true of Nasdaq: it made a 5.3% year-to-date advance. In 2006 it was 5.72%.

Performance of DJI in the first 10 days of a year since 2006

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We created our own charts, based on data for the first 10 days of every year. Although it’s a bit different from the data used by MarketWatch, the results are still the same: no years had such a strong kick-off ever since 2006, which is a notable performance. Many hope that this is a sign that this year might be better than the rollercoaster 2018 was for the markets.

The economy is strong

We can find a simple reason behind this surge this year: the US economy is healthy. Federal Reserve’s (FED) chairman, Jerome Powell said the same in Washington last week. According to MarketWatch, he also said that “the central bank would be cognizant of stresses to financial markets amid rate hikes”.

Performance of S&P 500 in the first 10 days of a year since 2006

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He’s not the only one who believes the economy is in good shape. As we wrote about it last week Blackstone’s investment strategist, Joseph Zidle told CNBC that "This is just not a recessionary environment". He also said that he believes S&P 500 will be up 15% this year.

What to expect?

US stocks are up approximately 10% since Christmas, which is a decent performance. We still believe, however, that price fluctuations are to be expected in the coming months and we aren’t alone to think so. Altogether we’re still positive about the years to come. Maybe not in 2019, but in 2020-2021 we’re expecting new market highs, and even new records are conceivable.

Performance of Nasdaq in the first 10 days of a year since 2006

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This is the reason why discipline and long-term thinking is a must this year, so after the fluctuations, investors can achieve great gains. These expectations also mean that 2019 can be a great year to invest in or rebuy stocks, since prices are expected to go up in the future.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.