{"id":1447724,"date":"2024-01-04T20:25:00","date_gmt":"2024-01-05T01:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1447724"},"modified":"2024-01-04T20:25:00","modified_gmt":"2024-01-05T01:25:00","slug":"magnificent-sevens-january-start-gives-clues-to-markets-year","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/magnificent-sevens-january-start-gives-clues-to-markets-year\/1447724\/","title":{"rendered":"Magnificent Seven’s January Start Gives Clues To Market’s Year"},"content":{"rendered":"

Magnificent Seven’s January Start Gives Clues To Market’s Year<\/span><\/p>\n

\n

Authored by Simon White, Bloomberg macro strategist,<\/em><\/p>\n

The first week of the year\u2019s performance in the seven largest S&P 500 stocks has some utility for gauging full-year results in the broad index.<\/strong><\/p>\n

<\/a><\/p>\n

Cameron Crise on Wednesday\u00a0looked at\u00a0how year-to-date returns in the S&P relate to full-year returns.<\/p>\n

Following on from this, I thought I would look at how the first week of the year\u2019s returns in the top seven stocks correlate with their full-year returns, and similarly for the remaining stocks in the index.<\/strong><\/p>\n

The results are shown in the table below.<\/p>\n

<\/a><\/p>\n

As can be seen, there is a relatively high correlation between top seven\u2019s first-week and full-year performance (data back to 1990). <\/strong><\/p>\n

This is a higher correlation than the index ex-top seven stocks (the rest), or the whole index.<\/p>\n

However, the hit ratio (the percentage of times where the first-week and full-year performances have the same sign) is under 50% for the top seven<\/strong>, while it is more than half for the rest, and the whole index.<\/p>\n

Does the top seven\u2019s early performance have any utility for the outlook for the index over the course of the year?<\/p>\n

It turns out it has some.<\/p>\n

There is a ~26% correlation between the top seven\u2019s first-week returns and the full index\u2019s whole-year returns, albeit with a hit rate of just under 50%. That correlation is higher than that between first-week and whole-year returns for the full index of ~19%.<\/p>\n

<\/a><\/p>\n

Based on this analysis, the prognosis for the S&P\u2019s 2024 returns has a negative skew<\/strong>, given the Magnificent Seven is so far down on the year and is underperforming.<\/p>\n

<\/a><\/p>\n

Nonetheless<\/strong>, in agreement with Cameron, there is no \u201ca-ha\u201d conclusion<\/strong> where year-to-date returns – either for the full index or subgroups of it – tell us something overly compelling about whole-year performance.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 01\/04\/2024 – 15:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/magnificent-sevens-january-start-gives-clues-markets-year<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Magnificent Seven’s January Start Gives Clues To Market’s Year Authored by Simon White, Bloomberg macro strategist, The first week of the year\u2019s performance in the…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1447724","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-64Co","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1447724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1447724"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1447724\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1447724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1447724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1447724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}