I don’t throw around numbers like 100% accurate lightly. But when you look at certain market indicators with decades of historical data backing them up, you start to see patterns that are hard to ignore.
The market has been under pressure recently, with Big Tech stocks sliding sharply and the Nasdaq 100 (QQQ) dropping as much as 2.5% Wednesday before recovering part of the move. Volatility like this can feel uncomfortable, especially when it comes fast, but it often fits cleanly into a broader trend rather than signaling a deeper breakdown.
Recently, I’ve been digging into some long-term market metrics — the kind that don’t show up in your daily chart analysis but can tell you a lot about where we’re headed over the next year. And what I’m seeing is still quite bullish despite the latest pullback.
At the same time, there are a few structural factors beneath the surface that help explain why the market’s strength has held and what could shape the next major move.
The January Barometer Is Flashing Green
You’ve probably heard of the January barometer before. The idea is simple: When January is positive, typically the rest of the year is very good. But here’s where it gets interesting…
The sweet spot is when January is up between 0.01-2%. Why does that matter? Because over the next 11 months, markets have only been lower once — meaning 92% of the time, given the January data, markets have gone higher the rest of the year.
That’s not a coin flip. That’s a statistically significant edge.
Investors Intelligence Advisors Sentiment Report is reinforcing the message. For the first time in over a year, this spread was above 46% earlier this week. Historically, when this number pushes above the 45-46% threshold, markets have gone higher 100% of the time over the next year.
But There’s One Potential Headwind Ahead
Now, I’m not here to tell you it’s all smooth sailing — which you can clearly see by what’s happened the past couple of days. There’s one thing on my radar that could throw a wrench in the works.
Markets tend to test new Fed Chairs. Historically, the average correction during the first six months of a new Fed leader is about 15%. It’s almost like the market wants to feel out the new policies and see how the Chair responds to pressure. So when the new Fed Chair takes office, a 10-15% pullback wouldn’t be unusual — it would be typical.
That said, the broader trend remains bullish. You can have a correction within a larger uptrend and still finish the year strong. Context matters.
Sector leadership is also playing a role in the market’s resilience. Industrials (XLI) for example continue to show strength. These are companies that tend to benefit from large government budgets and infrastructure spending and strong performance here often reflects underlying economic stability.
Finally, as we navigate this environment, it’s worth noting the value of high win rate strategies. In markets like this — trending but occasionally choppy — strategies with win rates above 80% can provide structure and discipline.
They help traders stay focused on high-quality setups rather than getting whipped around by noise.
Put it all together — the January barometer, bullish sentiment spreads, resilient breadth, sector strength and historical tendencies — and the picture becomes clearer. Even with the recent volatility there is plenty to be excited about as long as you stay grounded in the data.
Stay disciplined, stay focused and let the data guide your decisions.
Graham Lindman
Graham Lindman Trading
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