The study looks at the U.S. market as a whole (using more than 60 years' worth of CRSP (Center for Research in Security Prices) data, both value-weighted and equal-weighted) and also broken down into 10 size segments, 10 book-to-market equity ranges and 10 industries. In all cases, the January Barometer manifested statistically significant results (with the smallest size decile showing the strongest evidence of the theory's accuracy and the highest book-to-market equity decile showing the weakest evidence).

If the study did not go beyond this point, one might be tempted to throw in the towel on 2008, pull one's money from the stock market and stick it in the proverbial mason jar buried in the backyard. (Some people might be better off using one of those super-sized pickle jars from Wal-Mart or, like me, find the little jar the capers came in to be perfectly sufficient.) But Marshall and Visaltanachoti don't stop there: They decided to look at how the January Barometer theory works with individual stocks and with commodities.

When they looked at stocks that had positive performance in January, the data indicated that those stocks were not necessarily the ones that showed positive performance for the next 11 months. In some cases (though they were statistically insignificant), the data seemed to imply that an individual stock's positive (negative) performance in January actually might indicate that negative (positive) performance was likely for the following 11 months. So individual stock data did not back up the validity of the January Barometer theory, which is what one would expect it to do, even if the theory is more of a broad market concept.

The study also examines the performance of U.S.-traded commodities under the assumption that, if the January Barometer were the result of some behavioral quirk of the U.S. market, it would also apply to that particular asset class. And here's where I think the study may stray into some shaky territory—commodities are subject to so many global factors, no matter where they're traded, that it seems like they would instead show results similar to those of the MSCI World Index. So it really doesn't surprise me that the results for commodities don't support the January Barometer theory.

That said, I think the evidence that the January Barometer does not apply to individual stocks is enough to disprove the theory and support Marshall and Visaltanachoti's contention that the behavior is nothing more than the result of chance. Probably over time, as the years pass and the sample size grows, that 75% accuracy rate will trend toward 50%. I'd love to hear readers' reactions to the study and what they think the evidence supports. Based on January's rather horrific slide, do you think you can make a reasonable bet on the direction the market will take in the next 11 months?

You can access the article here.

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Heather Bell is assistant editor of IndexUniverse.com. She can be reached at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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