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[Oluti]

and as at the beginning of April it’s up to around the 1890 mark – another win for the Superbowl theory!

As January Goes For Stocks, So Goes The Year

This piece of received wisdom says that you should see how securities perform in January and make investment decisions for the rest of the year based on that. It seems that for the last 50 years of the 20th century, the January Barometer was correct 92.5% of the time.

Hemlines

A fun, if rather sexist theory now. It’s been purported that as hemlines of skirts rise, so do economies. This has been proved in the boom times of the sixties with the miniskirt, its revival in the eighties and, as the current recovery gains momentum, the appearance of short skirts once more.
Complex psychology lies behind the theory, again, much of it sexist. With apologies to female readers, the theory suggests that as good times approach with the prospect of wealthier men, women show more of their legs to attract them. When a downturn arrives, they don’t want to attract the attention of poorer men and so cover up!

Skyscraper Theory

This theory purports that when a country completes what will then be the world’s tallest skyscraper, its economy and its securities market will contract. The theory has been proved in 1931 with the Empire State Building, 1974 with the completion of the Sears Tower in Chicago and the Petronas Towers, Malaysia in1998. The contra-theorists point out that many such constructions are commissioned when times are good and due to the timescale of cyclical trends in markets, are completed at the start of a slowdown.

Presidential Effect

A rather confusing one now…
Many pundits say that the party which wins the US presidency has a direct effect on the stock market. Whilst this seems to be common sense dependent on the policies of the Democrats and the Republicans, the theory hasn’t worked in practice meaning no one is sure which party represents bulls and which represents bears!

October Crashes

Dealers are always worried about October and that’s why it’s tagged onto the end of the ‘Sell in May and Go Away’ adage. In 1929, 1987 and 2004, three of the worst financial crashes in history all occurred in October. An economics professor puts the record down to false correlation, simply reading into statistics what you want to see, others think the event is true because of the nervousness that pervades trading in the month because of previous events.

Hindenburg Omen

Not so much one of the market myths and legends and more of an indicator, this is simply a dramatic name for the confluence of five linked technical indicators appearing at the same time. It was due to be called the Titanic Effect but that soubriquet had already been used elsewhere. It’s meant to predict a crash and every downturn of note has been preceded by the ‘omen’ although a ‘crash’ has only been predicted on one in four occasions. The timing of the prediction is also a moot point with the downturns beginning within a week, all the way up to four months later.

Golden Cross

Another one for the technical geeks. The Golden Cross is when the short term moving average crosses above its long term moving average or resistance level. Whilst the rule seems to hold fast, cynics say that reading of the data in the run up to the event leads to media hype causing the rule to come true. The old case of the ‘self-fulfilling prophecy’.

Death Cross

Another technical indicator, the Death Cross, is formed when the 50 day moving average crosses the 200 day moving average whilst moving downwards. Interestingly, research into the Death Cross shows that for a century up to the 1990s the Death Cross was always followed by a market downturn but for some reason the indicator stopped working 22 years ago. The investigator put the failure of the indicator in modern times down to the fact that the two indicators have a much smaller influence today that prior to the 1990s.

 

[kerryjoy]

These market theories intrigue me because they combine psychology, history, and occasionally random events in ways that make me both skeptical and intrigued. While the Hemlines theory seems archaic but strangely memorable, the January Barometer's 92.5% accuracy forces me to pay attention to early trends. The presidential and skyscraper effects seem more coincidental than causal, so I'm wary of them. Although I am aware of how media hype can make technical signals like Golden and Death Crosses become self-fulfilling prophecies, I still find them fascinating. Ultimately, I consider these theories to be tools—interesting, but never definitive.

 

[lioralace]

Man, markets are just wild, aren’t they? Reading about all these so-called “theories” and indicators, you start to realize investors will seriously grab onto ANYTHING to try and make sense of the madness—sometimes it’s math, sometimes it’s straight-up folklore. You get the sense people are more predictable than stocks half the time.

Take the January Barometer. I mean, people actually lose sleep over how the market performs in January—like some Wall Street Groundhog Day. The idea is, you get a bullish January, you’re set for the year. Sure, it’s lined up a bunch of times over the decades, but there’s a reason most pros shrug and call it a cute coincidence. Markets are driven by, well, everything: inflation, geopolitics, tech blow-ups, El Niño probably. Pinning your hopes on a single month? It’s like reading tea leaves with a Bloomberg terminal.

And oh boy, the Hemline Theory. Only in finance could you find an “indicator” based on skirt lengths. Yeah, throw that one in the pile of things that should probably be left back in Mad Men days. Still, it’s oddly fascinating—sometimes style and sentiment really do dance together. Confidence, optimism, a little swagger in fashion and stocks... Maybe it’s not so crazy, at least as a loose metaphor. But hard science? Not even close.

The Skyscraper Theory cracks me up too. “The higher the building, the closer we are to the economic sun melting our wings.” Basically, if you see a record-breaking skyscraper topping out, look out below! Historically, sometimes that sticks—Empire State, Sears Tower, you get the drift. But honestly, these projects start when everyone’s rolling in dough and only wrap up years later. So, it’s more “look at us, we’re rich!” right before things tumble. Correlation? Sometimes. Causation? Eh.

Then there’s politics—oh lord. The infamous Presidential Effect. People clutching their pearls and watching which party wins, thinking their stock portfolio lives or dies based on an election. Newsflash: policies move the needle, not just red or blue flags. The actual numbers are such a mixed bag that you’d have better luck picking investments from a hat.

Let’s not forget spooky October. Every year, people get the jitters because “that’s when crashes happen!” Sure, 1929, 1987...but is that just haunted-house thinking? Who knows. People remember what scares them, that’s just human nature, and sometimes enough folks panicking makes those monkeys crash the market all over again.

Now, flip to the technical side: Hindenburg Omen, Golden Cross, Death Cross...these sound like either indie metal bands or a trader’s fever dream. Chart nerds eat this stuff up, and sometimes it actually works. But even something like the Death Cross lost its edge after the '90s. Maybe algos fried the wires. The point is—no magic bullet.

End of the day, all these legends and indicators—half statistics, half urban myth—they just show how desperate we are to draw a map through chaos. Sometimes you get a gem, but if you put all your money on hemlines or January’s vibes… good luck with that. The only recipe that works? A little data, a little gut, a LOT of knowing people are weird and emotional. Markets aren’t just numbers—they’re a mirror for every hope, fear, and panic attack out there. Trade wisely, and don’t forget your lucky rabbit’s foot (kidding – mostly).