Here is why the S&P 500 might end the year in positive territory

History sometimes repeats itself, and sometimes it rhymes. With stock markets, past performance is no guarantee of anything, but looking at historical trends can still help.

For example, the January effect holds that stock market performance during that month gives a pretty good indication of how markets are likely to perform for the remainder of the year. If January ends on a high note, expect a positive year. On the other hand, if stocks fall in January, there is a good chance that the year will end with a loss.

The question that arises from the January effect theory, is whether the first half of the year has any correlation to the trend of the second half? And the answer is yes.

Lets take a look at the performance of stock markets for the past 25 years, including Asian, the US and global markets. We found out that the trend from the first half of the year gives a good indication of the trend of the second half.

Here is a look at the performance of five of the indexes we looked at in the second half after the first half posted positive returns:

And here is a look at performance in years when first half returns were negative:

Again, what happens in the first half is often repeated in the second half.

This first half/second half effect is most prominent in Singapore, where a positive first half has been followed by a positive second half 88% of the time, while a negative first half led to a negative second half 75% of the time.

Data from 25 years seem to indicate that the first half has a clear correlation with the second half, and those invested in the first half this year may already know what this means.

The data from the first half of the year point out the positive sentiment towards S&P 500, but not so positive towards the MSCI World and ASIAN. However, the index price movements this year were not significant and the data available points out that the probability for a positive trend end of the year is not that great.

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