“One of Wall Street’s most noted indicators — the first five trading days of January — has sent its signal. And it says that this will be a good year for the stock market,” writes Floyd Norris in today’s New York Times.

“When the market goes up during the first five days, ‘it almost always indicates that the market will go up’ during the year, said John McGinley, the editor of Technical Trends, a newsletter published in Wilton, Conn.”

“The indicator was invented for the Dow Jones industrial average, but it has also worked for the Standard & Poor’s 500-stock index. Its record for the Nasdaq composite index is more spotty, but it has done a good job in years, like this one, when the Nasdaq average got off to a very good start.”

“When all three indexes start the year strongly, as they did this year, the market has usually done well.”

“During the first five trading days of this year, through Tuesday, the Dow rose 1.3 percent, the S.& P. climbed 1.1 percent, and the volatile Nasdaq composite soared 5.4 percent. It was the third-best start ever for the Nasdaq index. All the indexes slipped yesterday.”

“There have been 16 years since 1972, the first full year of the Nasdaq composite, when all three indexes rose during the first five days. Of the first 15, 10 ended with all indexes up for the year and 4 others produced gains in at least one of the indexes. Only 1973 turned into a bad year for all the indexes.”

“For the Nasdaq average, this was the 11th year when the average rose at least 2 percent during the first five sessions. Of the first 10, eight were followed by good years, with the average gaining at least 10 percent more. The years that had declines after strong starts were 1984 and 1987.”

“Mr. McGinley, who noted that the five- day indicator was first proposed by Yale Hirsch, the editor of the Stock Market Almanac, said that from 1942 through last year, the first five days of new years had shown gains in the Dow in 39 years and declines in 21. Of the 39 rises, the Dow went on to show gains in 32 of the years, while falling in just 7.”

“The years the indicator missed the Dow were 1966, 1973, 1974, 1981, 1984, 1990 and 2000.”