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[Keyser Soze]

February Trends

It looks like the "First Day of the Month" bullish bias trumped the bearish implications of the month of February, as the S&P 500 finished the day up half a percentage point. This certainly is a positive as historically speaking, February has typically been a weak month, with an average decline of 0.20%. As the chart below illustrates, the only month with a weaker record is September as the average decline in that month is 71 basis points. Going off on a tangent, we would note that the returns in October are particularly impressive since that includes 1987 when the S&P 500 declined over 21%. Ex 1987, October's average return since 1945 is 1.5%.

While we think it's always good to be aware of these seasonal tendencies in the market, we would also remind investors that while September is supposed to be the worst month of the year, last year we saw a 2.5% gain during that month which ended up being the third best month for '06.

[Keyser Soze]

Chart of the Day

As goes January, so goes the year. This particular phenomenon is what is referred to as the January Barometer. To test this theory, today�s chart presents the average performance of the S&P 500 one, three, six, and 11 months following a January gain (blue bars) and following a January loss (gray bars). The chart illustrates that the S&P 500 has performed much better (on average) during the months following a January gain. In fact, 11 months following a January gain; the S&P 500 was up 89% of the time. FYI - The S&P 500 was up 1.4% in January 2007.