If past is prologue, then what happens in the markets in January will likely tell us what we'll see for all of 2021. And that's according to the 2021 edition of the Stock Trader's Almanac, which recently arrived in my mailbox. The indicator I'm referring to is called the "January barometer." Markets have followed January's lead about 74% of the time since 1950. Even better, January has accurately predicted the rest of the year 14 out of 17 times in the years that followed a presidential election, which raises the barometer's batting average to .823 (or 82%) in years like this one. More ominously, every down January in the S&P 500 since 1950 has been followed by a bear market, a flat market or a 10% correction. (Of course, 2020 was an outlier of sorts... No one could have predicted how the pandemic would impact the markets.) I'd say that's a pretty good barometer - one that should definitely inform your decision about whether to bring an umbrella when you leave the house. Even more specifically, the first five trading days of the new year are a great early warning system, according to the Almanac. When the market is up over those five days, it also rises for the full year about 82.2% of the time, for an average 13.6% gain. As of this writing, the verdict for the first trading week of 2021 is nearly in. The S&P 500 was up almost 1.5% for the week. The Russell 2000 index of small cap stocks was up more than 6%, as investors concluded that accelerated economic growth - driven by new fiscal stimulus from the Biden administration - will benefit small companies the most. Get Ready for a Big January This January won't be - and hasn't been - uneventful by any means. We have quite a bit to watch. First and foremost, we had the Senate runoff elections in Georgia this past week. This was important for markets because now that the Democrats have won both elections and have thereby retaken control of the U.S. Senate, there will be economic and financial repercussions. Some of these are positive for markets, including the greater potential for additional fiscal stimulus and infrastructure spending. Some are negative, including the possibility of higher individual and corporate taxes, as well as reregulation in certain areas of the economy. In addition, there was the congressional confirmation of the presidential election, which took place on Wednesday. Though it was interrupted by an hours-long armed standoff between rioters and the National Guard in Washington, D.C., the confirmation was completed, and markets were relieved. Then - and most prominently - we have the ongoing rollout of several COVID-19 vaccines. So far, this has been a shaky and uneven process, and markets will take comfort when - or if - states can organize and accelerate it. That remains to be seen, but I expect a market surge if there's news that the rollout is improving. Market valuations are at extreme highs right now. That's particularly true for U.S. stocks and even more so for tech stocks. Take a look at the chart below. It shows the cyclically adjusted price-to-earnings (CAPE) ratio for the S&P 500, or the 500 largest public U.S. companies. This price-to-earnings (P/E) ratio shows how expensive these stocks are relative to their inflation-adjusted earnings of the past 10 years. As you can see, stocks right now are very pricey. In fact, they're now approaching the nosebleed altitudes of the late 1990s' dot-com bubble, which I've marked on the chart. If you don't remember - or are blocking it out intentionally - the market's ascent of that Himalayan peak was followed by a major market crash. The current market is a bit different, of course, and investors have been pouring money into tech stocks for reasons of safety more than rank speculation. Today, we're talking about Google's parent company, Alphabet (Nasdaq: GOOG), and Apple (Nasdaq: AAPL), rather than Pets.com. So there's much to watch and monitor in this critical first month of 2021. I hope you'll stay with us, as our Oxford Club strategists will be right by your side, uncovering opportunities and ideas and pointing out potential potholes. I'm looking forward to a big year. Enjoy your weekend and stay safe, Matt P.S. If you're interested in making the most out of the current market climate, Chief Investment Expert Alexander Green has the knowledge you need. His ultimate goal is to give everyone the ability to achieve financial freedom to truly enjoy the future. And since we're all very happy to see 2020 in the rearview mirror, you're going to want to give his strategy a look. Just click here to see his presentation on the #1 stock in America. | 
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