January Barometer Portfolio

According to the Stock Trader's Almanac, Standard & Poor's top 10 industries in January outperform the index over the next 11 months. To wit, the sectors which outperform in January have a historical tendency to outperform for the full year.

Although I don't have a source that will allow me to see the January performance of every Standard & Poor's top sub-industries, I think for general purposes we can get a sense of relative outperformance by just looking at the S&P's Sector Tracker:

So far all of the industries are struggling, but we have relative outperformance of three main groups - Utilities (XLU), Health Care (XLV), and Energy (XLE). Here are their charts:

As many of you know, I use Telechart which relies heavily upon Morningstar's Industry Groups. In fact, I utilize this for the stock screen machine as well as you see if you visit the All Screens filter which displays every stock currently found within my stock screen machine with their sector. To see which industry groups have been outperforming the most in January, here are the top 20 Morningstar subindustry groups in January:

While I'm not a big fan of utilizing these kinds of historical tendencies for buy-and-hold portfolio construction using just the performance of one month, so many out there do and for that reason alone we should be aware of this pattern and subsequent performance. Like always, knowing which sectors outperform and underperform is always a good idea no matter what time frame you use.