Strong SP500 bullish momentum in January, predict strong 2018, can something go wrong?

One of the oldest Wall Street plots is that "Whatever it is January, it will be the year." Since 1950, there are only nine discrepancies against the so-January Barometer.

There are, of course, several market risks, but the moods of world stock exchanges remain strongly positive, against the backdrop of lower US taxes and steady global growth.

"There is great potential," said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC, which expects the S&P to rise by another 7% to $3040, even if there is a short-term retracement.

In the past, what distorts the statistics of the January Barometer are external events such as the September 11 terrorist attacks, the Vietnam War of 1966-1968, and the expected military operations in Iraq in 2003.

At the moment, tensions around North Korea have subsided, but subsequent military action would lead to a high risk in one of the most prosperous economic regions. If that happens, much of the investment in emerging markets will be withdrawn, and this will lead to a deeper correction of stock markets and a significant increase in gold and JPY, as North Korea is already a nuclear power. This will be a really different war than we already know.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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