S&P and Nasdaq have their worst month since March 2020, Russell 2000 2nd Worse January Since 1979

A violent January for stock markets has come to an end. The major indices closed sharply higher on the day as gains accelerated into and on the last day of the trading month. While the major indices are still down on the month, the losses were slashed the last few days. S&P and Nasdaq have their worst month since March 2020. Nasdaq has its worst January since 2008. It was the 2nd worst start for Russell 2000 Since 1979. It could have been much worse the Russell was down over 20% from the high at one point.

Market Closes for January 2022

For the month

  • S&P and Nasdaq have their worst month since March 2020
  • Nasdaq has its worst January since 2008
  • S&P and Nasdaq have their best 2-day gain since November 2020
  • Tesla fell 11% in January
  • Amazon fell 10%.
  • Dow, -3.32%. The Dow was down -8.77% at the month’s low
  • S&P -5.3%. The S&P was down -11.4% at the month’s low
  • Nasdaq -8.98%. The Nasdaq was down -16.3% at the month’s low
  • Russell 2000, -9.8%. It was down -15.34% at the month’s low

Markets YTD

The January Affect – The Stock Trader’s Almanac

2nd Worst Start for Russell 2000 Since 1979

So much for the “January Effect” this year as small cap stocks measured by the Russell 2000 have been underperforming so far in 2022. The “January Effect” (not to be confused with our January Barometer) is the tendency for small caps to outperform large caps in the month of January. As we feature on pages 112 and 114 of the Stock Trader’s Almanac 2022, “Most of the So-Called January Effect Takes Place in the Last Half of December.” This did occur this time around as the Russell 2000 small cap index gained 2.3% from December 15, 2021, through December 31 vs. 1.3% for the Russell 1000 large cap index.

It also runs with some interesting bearish company: 2016 mini bear bottom in February 2008 bear, 2009 bear bottom in March, flat 2005, secular bull launch in August 1982, etc. It does indicate and confirm our outlook for heightened volatility this year, but it’s not a forgone indication for a bear market year. DJIA and S&P 500 finished these years in the black 66.7% of the time, NASDAQ 72.2% of the time, but the R2K was up only 55.6% of the time – not a glowing endorsement for small caps this year.

Enjoy live commentary from Our Trading Room at YouTube as the day wraps up – feel free to like and share

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For The Day

  • Dow industrial average up 406.37 points or 1.17% at 35131.85. The Dow all-time high close at 36952.65.
  • S&P index rose 83.67 points ro 1.89% at 4515.53 The S&P all-time high close at 4818.62.
  • NASDAQ rose 469.32 points or 3.41% at 14239.89 The Nasdaq all-time high.
  • Russell 2000 rose 59.94 points or 3.05% at 2028.45. The Russell 2000
  • Rebalancing into growth stocks was further aided by positive-minded analyst recommendations
  • Tesla (TSLA 936.72, +90.37, +10.7%), Netflix (NFLX 427.14, +42.78, +11.1%), Spotify (SPOT 196.26, +23.28, +13.5%), and Beyond Meat (BYND 65.13, +8.59, +15.2%) all upgraded to the equivalent of Buy ratings.
  • CBOE Volatility Index VIX 24.83AT CLOSE‎ -2.83 (‎-10.23%)
  • NYSE Adv 2673 Dec 621 Vol 1.4 bln
  • Nasdaq Adv 3564 Dec 805 Vol 5.0 bln

Ark of the Covenant not as it appears

ARK ETF

  • ARKK 75.32▲ 6.41 (9.30%)
  • ARKG 49.70▲ 3.76 (8.18%)
  • ARK X 16.40▲ 0.58 (3.67%)
  • ARK F 32.56▲ 2.59 (8.64%)
  • ARK W 94.71▲ 7.44 (8.53%)

As you can see here in the table above this is the second worst start to the year for the Russell 2000 since inception in 1979. Based year-to-date performance as of the 5th to last trading day of January 2022’s YTD loss of -10.7% is the second worst. Of the 18 years listed January was down in all but one year, 2007.

Cboe Daily Market Ratios:

Cboe Daily Market Statistics

Bonds

U.S. Treasuries finished with 10-yr note to unchanged by the close while shorter tenors finished with modest gains while equities rallied. 

  • 2-yr: -1 bp to 1.16%
  • 3-yr: -1 bp to 1.37%
  • 5-yr: -1 bp to 1.61%
  • 10-yr: UNCH at 1.78%
  • 30-yr: +2 bps to 2.10%

Any questions please feel free to ask them below. Trade Smart!

Source; TradersCommunity, Trader’s Almanac