Markets welcomed the new year with a positive move as Dow heavy weights Apple, Disney, Boeing and Exxon all jumped higher. These contributed to a new record high and could be part of what is called “the January effect” which generally means that a positive market move in the month of January signals optimism and increases the odds of a positive market result for the rest of the year. Some gurus poopoo this idea but several successful fund managers seem to pay attention to it. It is important to remember however that dating back 120 years, US markets have finished the year higher 69% of the time.
At the close today the Dow gained 330 at 28,869 on heavy trading volume. All indexes hit record highs. Stocks in Europe and Asia were higher after China cut interest rates and bank reserve requirements.
2020 market prognosticators continue to make projections. Hennessy Funds CEO Neil “Fudge” Hennessey put forth his 2020 outlook saying that more upside is in store given reasonable market valuations, $5 trillion in cash on the books for S&P 500 companies, a strong labor market, 8% dividend growth rate and the most important factor…..no euphoria! The current percentage of investment managers that are bullish is 33% down from 35% a year ago. Prior to the 2008 crisis the percentage of bullish investors was roughly 45% and fell to a low of 33% in early 2009 so you can see that with markets at all-time highs we are near the bottom for bullish sentiment. Fudge thinks this lack of euphoria means the bull market will live on in 2020. He did not give specific market targets.