Will the stock market be up or down this year? There are several versions of the “January Effect”. Here is the simplest one. Since the S&P was up 1.1% the first week of January, there is an 87% probability it will be even higher at year-end. Any questions?

In additon, the third year of the presidency, Republican or Democratic, has historically been the best year of their four year terms, since World War II. The average gain in those years is 17%. This is the third year. Any questions?

Seriously, such historical precedents are interesting but hardly instructive. While I do expect 2011 to be a bullish year, it is not because of these historical precedents. However, they are slightly comforting . . .