Wednesday marks the end of the first five trading days of 2025, an “early warning system” for how the month and the year could go, according to the Stock Trader’s Almanac. Along with the Santa Claus Rally and the January Barometer, the First Five Days is part of a trifecta of signals during the first month that could indicate what’s in store for the full year. In the last 48 years when the first five trading days were up, the market averaged a gain of 14.2%, ending the year higher 40 times, the Almanac showed. In the 26 years when the first five days were down, the market averaged a 0.3% increase, and it was up just 12 times. The gauge does even better in post-presidential election years. In the last 18 years when a new president was sworn into office, the market rose for the year 14 times. “The First Five Days is part of the puzzle,” said Jeff Hirsch, editor of the Stock Trader’s Almanac. “It’s still a short period of time, and it can be impacted by a random event here and there. But it does have a pretty decent record post-election years.” That could be a positive sign for investors, especially after the Santa Claus Rally — in which stocks rise the five final trading days of one year, and the first two of the next — failed to appear this time. December also was atypically a down month for the market. From the Dec. 31 close through the end of Tuesday’s session, the S & P 500 was higher by about 0.5%. .SPX YTD mountain S & P 500 YTD In fact, investors remain positive that stocks could end 2025 with a sizable advance, though not to the extent of the previous year when the S & P 500 ended up 23%. On average, market strategists expect the S & P 500 could end the year at 6,643, a level 12% higher from where the broader index closed Tuesday, a CNBC survey showed . “There are no major indications right now that this bull market or the economy are getting derailed,” Hirsch said. “We’ve been pretty bullish the last couple years, looking for these big gains. So, we backed that off a bit, and expect the bull market to continue, but with a little bit less gusto.” The January Barometer, which suggests the full year will follow the first month on the calendar, will have greater influence over investors’ outlooks — especially as investors await clarity on the latest inflation data, the Federal Reserve meeting, as well as the start of the president-elect’s term in office. In 2024, the barometer was the only one of the three indicators that was positive. “Santa Claus Rally, First Five Days are all well and good,” Hirsch said. “But January Barometer is key.”
This January indicator is an ‘early warning system’ for how the year will go