Generalization: any number of $1$s and $-1$s are written in a circle in any order, and the same steps are performed. We claim that the number of positive numbers written down has the same parity as the number of pairs of consecutive $1$s in the original circle. (For example, if there are four $1$s in a row flanked by $-1$s, that counts as three pairs of consecutive $1$s.)
The generalization is easy to prove inductively, since the only moves that change the number of pairs of consecutive $1$s are to remove a $-1$ that's between two $1$s or to remove a $1$ that has a $1$ as a neighbor, both of which result in writing a positive number down.