December Low Indicator

When the Dow closes below its December closing low in the first quarter, it is frequently an excellent warning sign. The December Low Indicator was originated by Lucien Hooper, a Forbes columnist and Wall Street analyst back in the 1970s. Hooper dismissed the importance of January and January's first week as reliable indicators. He noted that the trend could be random or even manipulated during a holiday-shortened week. Instead, said Hooper, "Pay much more attention to the December low. If that low is violated during the first quarter of the New Year, watch out!"

17 of the 31 occurrences were followed by gains for the rest of the year after the low for the year was reached. Hooper's "Watch Out" warning was absolutely correct. All but one of the instances since 1952 experienced further declines, as the Dow fell an additional 11.1% on average when December's low was breached in Q1. Only three significant drops occurred when December's low was not breached in Q1 (1974, 1981, and 1987).

YEARS DOW FELL BELOW DECEMBER LOW IN FIRST QUARTER
  Previous Date Crossing Subseq. % Change Rest of Year Full Year Jan  
Year Dec Low Crossed Price Low Cross-Low % Change % Change Bar  
1952 262.29 2/19/52 261.37 256.35 — 1.9 11.7 8.4 1.6 ²
1953 281.63 2/11/53 281.57 255.49 — 9.3 — 0.2 — 3.8 — 0.7 ³
1956 480.72 1/9/56 479.74 462.35 — 3.6 4.1 2.3 — 3.6 ² ³
1957 480.61 1/18/57 477.46 419.79 — 12.1 — 8.7 — 12.8 — 4.2  
1960 661.29 1/12/60 660.43 566.05 — 14.3 — 6.7 — 9.3 — 7.1  
1962 720.10 1/5/62 714.84 535.76 — 25.1 — 8.8 — 10.8 — 3.8  
1966 939.53 3/1/66 938.19 744.32 — 20.7 — 16.3 — 18.9 0.5 ¹
1968 879.16 1/22/68 871.71 825.13 — 5.3 8.3 4.3 — 4.4 ¹ ² ³
1969 943.75 1/6/69 936.66 769.93 — 17.8 — 14.6 — 15.2 — 0.8  
1970 769.93 1/26/70 768.88 631.16 — 17.9 9.1 4.8 — 7.6 ² ³
1973 1000.00 1/29/73 996.46 788.31 — 20.9 — 14.6 — 16.6 — 1.7  
1977 946.64 2/7/77 946.31 800.85 — 15.4 — 12.2 — 17.3 — 5.1  
1978 806.22 1/5/78 804.92 742.12 — 7.8 0.01 — 3.1 — 6.2 ³
1980 819.62 3/10/80 818.94 759.13 — 7.3 17.7 14.9 5.8 ²
1982 868.25 1/5/82 865.30 776.92 — 10.2 20.9 19.6 — 1.8 ¹ ²
1984 1236.79 1/25/84 1231.89 1086.57 — 11.8 — 1.6 — 3.7 — 0.9 ³
1990 2687.93 1/15/90 2669.37 2365.10 — 11.4 — 1.3 — 4.3 — 6.9 ³
1991 2565.59 1/7/91 2522.77 2470.30 — 2.1 25.6 20.3 4.2 ²
1993 3255.18 1/8/93 3251.67 3241.95 — 0.3 15.5 13.7 0.7 ²
1994 3697.08 3/30/94 3626.75 3593.35 — 0.9 5.7 2.1 3.3 ² ³
1996 5059.32 1/10/96 5032.94 5032.94 NC 28.1 26.0 3.3 ²
1998 7660.13 1/9/98 7580.42 7539.07 — 0.5 21.1 16.1 1.0 ²
2000 10998.39 1/4/00 10997.93 9796.03 — 10.9 — 1.9 — 6.2 — 5.1  
2001 10318.93 3/12/01 10208.25 8235.81 — 19.3 — 1.8 — 7.1 3.5 ¹
2002 9763.96 1/16/02 9712.27 7286.27 — 25.0 — 14.1 — 16.8 — 1.6  
2003 8303.78 1/24/03 8131.01 7524.06 — 7.5 28.6 25.3 — 2.7 ¹ ²
2005 10440.58 1/21/05 10392.99 10012.36 — 3.7 3.1 —0.6 —2.5  
2006 10717.50 1/20/06 10667.39 10667.39 NC 16.8 16.3 2.5  
2007 12194.13 3/2/07 12114.10 12050.41 —0.5 9.5 6.4 1.4 ²
2008 13167.2 1/2/08 13043.96 7552.29 —42.1 —32.7 —33.8 —6.1  
2009 8149.09 1/20/09 7949.09 6547.05 —17.6 31.2 18.8 —8.6 ¹ ²
2010 10285.97 1/22/10 10172.98 9686.48 —4.8 13.8 11.0 —3.7  
Average Drop  — 10.9%
¹ January Barometer wrong     ² December Low Indicator wrong     ³ Year Flat


YEARS DOW DID NOT FALL BELOW ITS DECEMBER LOW IN Q1
  Previous   Subseq. % Change   Rest of Year Full Year Jan.  
Year Dec Low Q1 Low Low Cross-Low   % Change % Change Bar.  
1950 192.71 196.81 196.81 NC   19.6 + 17.6 + 1.7  
1951 222.33 238.99 238.99 NC   12.7 +14.4 + 6.1  
1954 278.30 279.87 279.87 NC   44.5 +44.0 + 5.1  
1955 384.04 388.20 388.20 NC   25.8 +20.8 + 1.8  
1958 425.65 436.89 436.89 NC   33.6 +34.0 + 4.3  
1959 556.08 574.46 574.46 NC   18.3 +16.4 + 0.4  
1961 593.49 610.25 610.25 NC   19.8 +18.7 + 6.3  
1963 640.14 646.79 646.79 NC   18.0 +17.0 + 4.9  
1964 751.82 766.08 766.08 NC   14.1 +14.6 + 2.7  
1965 857.45 869.78 840.59 — 3.4   11.4 +10.9 + 3.3  
1967 785.69 786.41 786.41 NC   15.1 +15.2 + 7.8  
1971 794.29 830.57 797.97 — 3.9   7.2 +6.1 + 4.0  
1972 846.01 889.15 889.15 NC   14.7 +14.6 + 1.8  
1974 788.31 803.90 577.60 — 28.2   — 23.3 —27.6 — 1.0 ²
1975 577.60 632.04 632.04 NC   34.9 +38.3 + 12.3  
1976 818.80 858.71 858.71 NC   17.0 +17.9 + 11.8  
1979 787.51 807.00 796.67 — 1.3   3.9 +4.2 + 4.0  
1981 908.45 931.57 824.01 — 11.5   — 6.1 —9.2 — 4.6 ²
1983 990.25 1027.04 1027.04 NC   22.6 +20.3 + 3.3  
1985 1163.21 1184.96 1184.96 NC   30.5 +27.7 + 7.4  
1986 1457.91 1502.29 1502.29 NC   26.2 +22.6 + 0.2  
1987 1895.95 1927.31 1738.74 — 9.8   0.6 +2.3 + 13.2  
1988 1766.74 1879.14 1879.14 NC   15.4 +11.8 + 4.0  
1989 2092.28 2144.64 2144.64 NC   28.4 +27.0 + 7.1  
1992 2863.82 3172.41 3136.58 — 1.1   4.1 +4.2 — 2.0 ³
1995 3685.73 3832.08 3832.08 NC   33.5 +33.5 + 2.4  
1997 6268.35 6442.49 6391.69 — 0.8   22.8 +22.6 +6.1  
1999 8695.60 9120.67 9120.67 NC   26.1 +25.2 + 4.1  
2004 9853.64 10048.23 9749.99 — 3.0   7.3 +3.1 + 1.7  
2011 11255.78 11613.30 10655.3 — 8.2   +5.2 +5.5 +2.3 ³
2012 11766.26 12359.92 12101.46 — 2.1   -0.8 +7.3 +4.4  
2013 12938.11 13328.85 14550.35 NC * As of April 10, 2013   +5.0
¹ January Barometer wrong     ² December Low Indicator wrong     ³ Year Flat