DOW - Stock rally at start of 2010 augurs well -- maybe

If the stock market holds to a pattern it has followed for most of the past 40 years, 2010 could be a big year for investors. Since 1973, a big advance on the first trading day of January has been a strong sign stocks will post robust gains for the rest of the year.

But for those who believe "as January goes in the stock market, so goes the rest of the year," the first trading day of 2010 is a good omen.


The market may also have rallied Monday based on what's known as the "January effect," the buying spurt that often occurs with the start of a new tax year. Investors who sold stock before the end of the old year to claim a tax loss reinvest that money when trading begins again.


According to the "Stock Trader's Almanac," a book that tracks market trends, there have been only five times since 1950 when the January effect turned out to be a poor indicator of the rest of the year.

Sometime, when I looked at the trendline drawn and

amaze at the high probability of bouncing off the trendline.