Have you heard of the 5-day rule?
Now I know how much we love our seasonal trades here at ForexLive.com, so I had to post this very interesting statistic I came across on a Reuters article yesterday. It is a statistic based upon the so called 5-day rule for the S&P 500. The rule is as follows:
if the S&P 500 rises in the first five trading sessions of the year, it will end the year higher.
That is now in fact the case. The article reminds readers of the obvious fact that the S&P 500 usually rises. Since 1957 it has increased value in 45 of those 62 year.
The 5-Day rule has a success rate of 80%.
The article points out that in the 41 years where the market has risen in the first five trading days of January, it has ended the year higher in 33 of them.
A positive January has a year-end success rate of 86%
The results for a positive January are even stringer. So, of the 37 January's that registered a plus month 32 of those years have gone on to register positive performances. A hit rate of 86%
Anyway, well worth a read given the statistical edge that this data reveals. Read the article in full here.
Recap on GBP?USD - Caution is warranted with looking for places to short the GBP/USD , as rumours are circulating at the time of writing that Article 50 may be extended . See yesterday's post here for some strategies in trading the GBP?USD with changing sentiment.
