“To appreciate the beauty of a snowflake it is necessary to stand out in the cold.” Aristotle
The final month of 2024 is nearly here and in today’s blog I wanted to take a look at why we think the chance of another strong month to end this record-breaking year is likely. Here are five things to know about December.
First, you should know about the Santa Claus Rally (SCR). The SCR is named for the period that includes the last five days of December (usually starting after Christmas) and the first two trading days of the new year. You will hear all about the SCR over the coming weeks. Just know it isn’t about the full month — it is about the late year/early year rally see most years. We will discuss the Santa Claus Rally more next month.
Second, December is the S&P 500’s second-best month of the year in an election year, with only November better. Given stocks have soared so far in November, this one is playing out again so far. Also note, December is higher 83.3% of the time, making it the most likely month in an election year to be higher.
Third, since 1950, December is the third best month on average (only April and November are better). In the past decade it is only the 10th best month, thanks in part to a 6% drop in 2022 and a 9% crash in 2018.
Fourth, no month is more likely to be higher overall, with the S&P 500 up in December nearly 75% of the time. The next closest is April up more than 71% of the time.
What about if stocks are up a lot going into the final month? History says a chase into year-end is quite possible. We found the past 10 times the S&P 500 was up at least 20% going into December, that final month gained nine times and was up a solid 2.4% on average.
Thanks for reading and here’s to a relaxing Thanksgiving holiday. We discuss many of these concepts in our recent Facts vs Feelings podcast below.
For more content by Ryan Detrick, Chief Market Strategist click here.
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