Why For Stock Markets Bulls, Monday Could Be "The Most Important Day"

The holiday-shortened first week of 2018 was the best start to a year for Nasdaq since 2004 with all major indices up every trading day of the year so far.
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Between the last week of December and the first week in January, Bloomberg reports that the S&P 500 has reversed direction every year since 2011.
 
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A possible explanation is the expiration of government policies on Dec. 31.
After 4 trading days, the S&P 500 is up 2.6% year-to-date – that is the best start to a year for the S&P since 2006 (and would have been the best weekly gain in 2017).
Critically though, as Ryan Detrick notes, “since 1950, when the first 5 days are up over 2%, the S&P 500 is higher for the year 15 out of 15 times with an average return of +18.6%. ”
So, as Detrick concludes, if you are bullish, Monday is a big day.
Of course, January is another seasonally strong month, with an average total return of +1.2% (+1.1% price return) since 1928. A positive January has historically led to a positive year 86% of the time (80% on a price return basis), with an average total return of +17% (+13% price return). A down January has led to a negative year 47% of the time (56% on a price return basis) with an average total return of +2% (-1% price return).

“This doesn’t mean the index will go straight up from here, but the economic fundamentals are strong enough to support the stocks,” said Phil Orlando, chief equity strategist at Federated Investors.
“Corporate earnings growth has been solid in the last nine months, we expect another double-digits in the fourth quarter. The party is going to continue.

 
www.zerohedge.com/news/2018-01-06/stock-markets-bulls-monday-matters