We’re now in the homestretch of 2024, and the 16th of December is when seasonality becomes a tailwind for stocks for the remainder of the month.
Here’s the chart:
(right-click and open image in new tab to zoom in)
Let's break down what the chart shows:
This blue line represents the average return for December since 1950 for the S&P 500.
The Takeaway: It's perfectly normal for stocks to remain relatively flat during the first half of December. For the first half of December 2024, we only saw a gain of 0.31%.
The recent weak breadth, combined with a rotation into underperforming stocks, is at the top of my list of reasons for the market's current sideways movement.
But today, the 16th of December, we see a switch in the seasonality environment!
For most of 2024, stocks have outperformed seasonal trends, as this year is shaping up to be one of the best election years ever! So, will this pattern play out this December? Or not?
The strong performance in the second half of December is partly due to the Santa Claus Rally, which begins on December 24 and lasts until the second trading day of the new year. Since 1950, the median gains for the S&P 500 during this seven-trading-day period have been an impressive 1.3%.
