Financial Services Association, December 2 (Editor: Xiaoxiang) Aristotle once said, “If you want to enjoy the beauty of snowflakes, you must endure the cold of winter.” So, as US stocks are about to enter the end of the year, what attitude will investors take to enjoy a spectacular snowy scene?

Ryan Detrick, chief market strategist at Carson Group, wrote an article over the weekend that the last month of 2024 is coming soon, and historical rules may tell you five things about how US stocks will go in December:

① Santa Claus quotes

Detrick pointed out that first, you should have heard of “Santa Claus Rally” (Santa Claus Rally). “Santa Claus Market” refers to the last 5 trading days of each year (usually starting after Christmas) and the first 2 trading days of the following year. According to the findings of Yale Hirsch, author of “The Stock Trader's Yearbook,” US stocks are always likely to perform strongly during this period. Over the past 70 years, the average increase in the S&P 500 index has reached more than 1.3% in these seven trading days.

It's easy to imagine that in the next few weeks, the “Santa Claus Market” approach may inspire optimism in the market. However, Detrick also cautioned that the scope of the “Santa Claus' market” is mainly the year-end and New Year rebound seen in most years; it does not cover the whole of December; there is still some distinction to be made in this area.

② Election year experience

So, if we turn our attention to a single month, how did US stocks perform in December history? Detrick first counted the general election year situation over the past 70 years.

According to Detrick's statistics, December was the second-best performing month for the S&P 500 in the election year — only November (that is, election month itself) is better than that. However, considering the further surge in US stocks during this year's election month, this situation seems to be playing out again so far. Also, it is worth noting that in December of the election year, the S&P 500 index has an 83.3% chance of rising, which is the month in which the market is most likely to rise during the election.

③ Average performance in December

Leaving aside the impact of the US election, Detrick's statistics show that since 1950, December has remained the third-best month for the S&P 500 average performance — after April and November.

However, in the past ten years, December's performance wasn't outstanding — it only ranked 10th in terms of average return for each month of the year, partly because the S&P 500 index fell 6% in December 2022 and also plummeted 9% in December 2018.

④ The easiest month to rise

As far as probability is concerned, apparently no month is more likely to rise than December.

Detrick's statistics show that over the past 70 years, the probability that the S&P 500 index will rise in December is close to 75%. This is followed by April — the probability of an increase of over 71%.

⑤ Did the previous 11 months set the tone for the end of the year?

What would happen if US stocks had already risen a lot as we entered the last month of the year?

Detrick said history shows that the result is likely to be a further rise in the stock market until the end of the year.

Detrick's statistics show that in the past 10 times, when the S&P 500 index rose at least 20% in the first 11 months of the year, 9 times achieved further increases in December, with an average increase of 2.4%.

Coincidentally, Jeff Hirsch, editor-in-chief of “The Stock Trader's Yearbook”, also recently said that Thanksgiving may mark the beginning of a strong seasonal bullish pattern in the US stock market.

He wrote in a report that it had combined these seasonal events into one transaction: buy on the Tuesday before Thanksgiving and hold until the second trading day of the new year — since 1950, the S&P 500 index had a 79.73% chance of a positive return from the Tuesday before Thanksgiving to the second trading day of the new year, with an average increase of 2.58%.