Every January, investment "experts" are all too eager to offer advice about the course of the stock market over the next 12 months (and apologise for getting their predictions so badly wrong in the previous year).

They are quick to back up their forecasts and recommendations with theories and analysis which, supposedly, gives them an insight into what is in store.

However, some commentators believe that they could save themselves a lot of bother by instead relying on the so-called "January indicator".

Fans of the indicator believe that if, at the close of business on the fifth trading day, share prices are higher than they started the year, then there is a good chance that they will end the year higher too.

Unless the market slumps significantly tomorrow - the fifth trading day - things are looking up. The FTSE 100 started the year at 4,434 and, when it opened this morning at 4,639, was 5 per cent higher. There has been a sell off this morning, but the market will still need to drop by more than 100 points to finish the fifth day lower than it started.

For the extreme devotees of this approach, the die is already cast. In a high proportion of years the first day's market action alone foreshadows the outcome for the succeeding 12 months. And last Friday, January 2, the FTSE 100 ended up 128 points at 4,562.

It is easy to scoff at such simplistic ways of forecasting the future, but the indicator does seem to work remarkably well. The indicator pointed to a negative year in 2008 - the market was down 40 points on the first trading day and 121 points lower by the end of day five. What followed was the worst year of losses since the benchmark was created in 1985, with the index ending more than 31 per cent down.

Research into the American stock market suggests that the January indicator, or "barometer" as they call it in the US, has worked in 60 of the past 80 years.

The historical evidence is less convincing for the UK, but if the indicator is positive when the market closes tomorrow, it will chime with may experts' forecasts for the year ahead.

In London, blue chip shares are tipped to make gains of about 6 per cent this year, polling among leading investment groups by Reuters suggests: a modest but welcome return after a torrid year. Forecasters are even more positive about the outlook for the US and European markets.

If they are proved right, investors can look forward to a happy new year.

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