{"id":17451,"date":"2025-01-15T17:00:33","date_gmt":"2025-01-15T22:00:33","guid":{"rendered":"https:\/\/mtatradeoftheday.com\/?p=17451"},"modified":"2025-01-15T16:01:06","modified_gmt":"2025-01-15T21:01:06","slug":"what-the-rule-of-5-predicts-for-2025","status":"publish","type":"post","link":"https:\/\/mtatradeoftheday.com\/what-the-rule-of-5-predicts-for-2025\/","title":{"rendered":"What the \u201cRule of 5\u201d Predicts for 2025"},"content":{"rendered":"<p>When it comes to how I&#8217;m trading 2025, I have two major themes.<\/p>\n<p>I went over both of them at the Monument Traders Alliance Roundtable yesterday.<\/p>\n<p><a href=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" data-url=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to watch the full event if you haven&#8217;t already.<\/a><\/p>\n<p>One concept I went over was &#8220;The Rule of 5.&#8221;<\/p>\n<p>It&#8217;s a very simple rule I&#8217;m following this year.<\/p>\n<p>Check out the data below&#8230;<\/p>\n<p>Looking back over the past 100 years, years ending in 5 have been consistently positive.<\/p>\n<p>The one exception was 2015, when the equity market returned negative 1% &#8211; not too bad. Here are the historical results.\n<\/p>\n<ul style=\"padding: 0; margin: 0px 0px 0px 40px;\">\n<li style=\"margin: 21px 0px 21px 0px;\"><strong>S&amp;P Return 1935: +43%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1945: +30%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1955: +26%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1965: +9%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1975: +31%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1985: +26%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 1995: +34%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 2005: +3%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 2015: -0.73%<\/strong><\/li>\n<li style=\"margin: 0px 0px 21px 0px;\"><strong>S&amp;P Return 2025: ???<\/strong><\/li>\n<\/ul>\n<p style=\"font-size: 14px;\">Source: <a href=\"https:\/\/www.macrotrends.net\/2526\/sp-500-historical-annual-returns\" data-url=\"https:\/\/www.macrotrends.net\/2526\/sp-500-historical-annual-returns\" target=\"_blank\" rel=\"noopener noreferrer\">https:\/\/www.macrotrends.net\/2526\/sp-500-historical-annual-returns<\/a><\/p>\n<p><a href=\"https:\/\/dkwegfj7whlol.cloudfront.net\/monument\/td\/20250115_TD_Historical.jpg\" target=\"_blank\"><img decoding=\"async\" class=\"size-medium wp-image-23634 cc_pointer aligncenter\" src=\"https:\/\/dkwegfj7whlol.cloudfront.net\/monument\/td\/20250115_TD_Historical.jpg\" alt=\"Historical Returns for the S&#038;P 500\" width=\"550\" \/><\/a><\/p>\n<p>As you&#8217;ll see in the chart above, years ending in 5 have been some of the most historically strong years in the history of the market.<\/p>\n<p>And this rule of 5 actually dovetails nicely into another data point I&#8217;m watching closely this year.<\/p>\n<p>You see&#8230; while there&#8217;s clear positive S&amp;P correlation for years ending in &#8220;5,&#8221; we also have a situation where we haven&#8217;t seen a 10% correction in more than 18 months.<\/p>\n<p>Typically markets pullback at least 10% every 8 to 9 months.<\/p>\n<p>So here we are, in a strong market year ending in &#8220;5,&#8221; but we haven&#8217;t seen a 10% correction that we&#8217;re overdue for.<\/p>\n<p>Do you see the conflict there?<\/p>\n<p>Which brings me back to the thesis of 2025 being &#8220;an investor hell and a trader&#8217;s paradise.&#8221;<\/p>\n<p>I could see the 2025 market ending in the positive but also see a freak-out period where the market has a 10% pullback.<\/p>\n<p style=\"margin-top: 20px;\"><img decoding=\"async\" style=\"width: 31px; max-width: 90%; display: block; margin: 0 5px 0 0;\" src=\"https:\/\/s3.amazonaws.com\/assets.oxfordclub.com\/emails\/images\/TD_EDS_Daily_Icon-62.png\" alt=\"Logo\" width=\"31\" height=\"auto\" align=\"left\" \/><\/p>\n<h2 style=\"color: #1169B7; font-size: 18px; line-height: 26px; margin-top: 20px; margin-bottom: 20px;\"><strong>YOUR ACTION PLAN<\/strong><\/h2>\n<p>Based on the recent data, let&#8217;s prepare for more upside bias in 2025 &#8211; but at the same time &#8211; also be ready for a major market correction &#8211; which I believe is long overdue.<\/p>\n<p>For more on my complete 2025 trading plan, check out the <a href=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" data-url=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" target=\"_blank\" rel=\"noopener noreferrer\">Monument Traders Alliance Live Roundtable<\/a>.<\/p>\n<p>I also gave my No. 1 takeover candidate for 2025 during this event.<\/p>\n<p>You won&#8217;t want to miss that pick.<\/p>\n<p><a href=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" data-url=\"https:\/\/insights.mta-live.com\/2025-forecast-and-predictions-live-event\/\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to unlock my latest buy opportunity.<\/a><\/p>\n<hr>\n","protected":false},"excerpt":{"rendered":"<p>After looking over the data for the last 90+ years, I found some surprising patterns <\/p>\n","protected":false},"author":2,"featured_media":17452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1038],"tags":[],"mobile_app_tag":[1649],"class_list":["post-17451","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trade-of-the-day","mobile_app_tag-active-trading"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v18.2.1 (Yoast SEO v24.1) - 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