Connect with us


Finance: The markets are aiming higher



PHUKET: At the start of 2017, much of the media coverage about the stock market was focused on the Dow Jones reaching the 20,000 level, with some commentary about how the ‘January Effect’ or ‘January Barometer’ theories could help the market. Before discussing what I believe technical indicators are predicting, we need to debunk any theories that claim to predict the market’s direction.

The January Effect was first noticed by investment banker Sidney Wachtel in the 1940s and is partially based on the assumption that some investors sell stocks in December for tax purposes. Then in January, others use their bonuses to buy back stocks, fulfill New Year’s resolutions to invest more, or meet with their financial advisers to discuss their new year’s investment strategy.

While there may have been a January Effect in the 1940s when stock markets were much smaller and more inefficient, that’s no longer the case. There are many more investors now, with most using tax-sheltered retirement plans.

The January Barometer theory states that the movement of the S&P 500 during the month of January will set the stock market’s direction for the year. The most glaring problem with this theory is the fact that the market plunged in January 2016 and yet ended the year up 10 per cent.

Instead of relying on dubious theories, I use technical indicators, with the first one being the double bottom base on the Dow. This technical formation was formed by the October 2015 and January 2016 declines along with two years of sideways trading from where those declines began.

After Brexit, the Dow has continued to reach new highs, with a strong leap after the US elections. This means the technical indicator is still in play and presenting a cup and handle formation with the original double bottom base being the cup and the subsequent post-Brexit and post-US election rallies being the handle.

This makes Dow 20,585 and Dow 22,000 both look doable. And while the latter may sound too bullish, its only 8-10 per cent higher from mid-January levels.

As for the S&P 500, it’s been range-bound from the end of the 1990s until 2013 when it finally broke out, going sideways in 2015. After Brexit, the S&P 500 took off only to pull back before bolting higher once again after the US elections, and continuing to climb higher in 2017. I would not want to see the S&P 500 break down below the 2,000 Brexit level as that would tell me there is more negativity and even a possible recession.

As of mid-January, there is no sign of bearish price action that might cause either market index to roll over. So until the price action tells us something different, there is no reason to not stay invested in stocks. I will be keeping my clients invested in growth stocks and sector ETFs that are outperforming the overall market. I like Alibaba, Microsoft, Google, Amazon, Facebook, Netflix and some small caps.

Don Freeman, BSME, is president of Freeman Capital Management, a registered Investment Adviser with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expats, specializing in portfolio management, US tax preparation and financial planning. Call 089-970 5795 for a free portfolio review or email

— Don Freeman


Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

World4 mins ago

South Korea gives North Korea a warning

Visa33 mins ago

Philippines offers attractive alternative to Thailand’s 10 year LTR visa

Phuket1 hour ago

Thousands join Chinese ceremony at Phuket Vegetarian Festival

Coronavirus (Covid-19)1 hour ago

Bang Sue’s Central Vaccination Centre officially closed

Thailand1 hour ago

Nuan the cat feline good about upcoming APEC meeting

Weather2 hours ago

Bangkok area flood caused by 100 sandbags in drain

Join the conversation on the Thaiger Talk forums today!
Thailand2 hours ago

VIDEO: Shooting range employees save man from suicide in northern Thailand

Crime2 hours ago

Gold necklace theft on Pattaya Beach Road

Phang Nga2 hours ago

Japanese man drowns near Phang Nga resort

Thailand3 hours ago

Foreigners anger Chiang Mai locals for kissing in temple

Transport3 hours ago

Korean Air resumes two routes to Thailand

Road deaths4 hours ago

16 year old driving BMW crashes, killing young graduate in northeast Thailand

Bangkok4 hours ago

Murdered woman buried in 7 bags under expressway

Tourism4 hours ago

Maya Bay reopens once again to the public

Thailand4 hours ago

30 trail runners stuck in Isaan forest due to flash flood

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11