6 Surprisingly Accurate
Indicators

Stock market gyrations aren't entirely random. For 37 years, Stock Trader's Almanac has offered amazingly reliable indicators of market performance. Consult a financial adviser if you have questions or trends seem contradictory. You still need to analyze individual stocks be- fore investing.

THE .JANUARY BAROMETER
The stock market usually sets its direction for the whole year in January. The S&P 500 Index has reflected this tendency 92.3% of the time since 1950. Eleven bear markets out of 17- including the last one-began with a poor January.
The S&P 500 was down by 2.8% this
January because of war jitters.

PRE.PRESIDENTIAL ELECTION YEAR
Pre-presidential election years like this one are a time of stock gains. Presidents intentionally juice up the economy-with tax cuts, increased spending, etc.-in pre-election years. We haven't had a down market in the third year of a presidential term since 1939-when the outbreak of World War II pushed down the Dow by 2.9%. Since 1914, the average gain for the Dow from the market low (during the second year of a presiden- tial term) to the high in the pre-election year is an astounding 50.2%.

BEST SIX MONTHS FOR INVESTING
Since 1950, the stock market has per-
formed best from November through April and worst from May through October. Only twice since 1950 has the Dow posted a double-digit loss during the November-through-April period-in 1970, during the invasion of Cambodia, and in 1973, during the OPEC oil embargo.

DECEMBER'S FREE LUNCH AND THE SANTA CLAUS RALLY
Investors typically dump losing stocks in December in order to realize tax losses. By late December, many stocks have been hammered down to bar- gain levels. New York Stock Exchange stocks selling at their 52-week lows near the end of December usually out- perform the market by February. Over 29 years, these stocks have averaged a 13.9% increase in that short span, com- pared with the NYSE Composite, which gained 4.2% over the same period.
A short but robust rally during the last five days of December and the first two days ofJanuary-the Santa Claus rally- comes to Wall Street most years. Since 1969, the gain from this rally has aver- aged 1. 7% over just those few days. In 2002, it was 1.3%. There have been 25 Santa Claus rallies in the last 33 years.
Beware of Santa's claws: When there's no Santa Claus rally, trouble often is ahead. Hence the couplet-If Santa Claus should fail to call, bears may come to Broad and Wall (where the New York Stock Exchange is located). There was no Santa Claus rally in 1999. The bear market began on January 14, 2000.

PRE-ST. PATRICK'S DAY RALLY
Experienced traders know that the
market often rallies before major legal holidays. People are about to get time off, so they feel upbeat Most traders don't realize how strong the market is the day before St Patrick's Day-which isn't a legal holiday but is celebrated. Going back to 1953, the s&P 500 has gained an average of 0.33% on that day-equal to a 30-point advance for the Dow at today's levels. I view this indicator as just for fun, but people do make money following it

DOWN FRIDAY AND MONDAY
Trouble often looms when stock prices are down sharply on both a Friday and the following Monday-six times out of seven, the market will go lower within five days. In 1987, the Dow lost 108 points on Friday, October 16, and 508 points the following Monday.
WHAT TO DO NOW
2003 could be an exception to the January barometer. After falling in Janu- ary, stocks have rallied strongly. Reason? It's a pre-presidential election year. I expect the Dow to close this year at 50% above its late-2002 low-back over 10,000. I am not convinced the bear mar- ket is over, but we should experience gains for at least six months starting this fall. Take profits on winning stocks. Buy new stocks before the rally resumes. .