We have been split days since last month for the year, and the S&P500 is on the verge of getting its best performance since 2013. Historically, in most cases, the rally continued in December.
Perhaps the exception is the December 2018 sell-off. It was also the worst month for the US markets since 1931. Some of the factors that catalyzed the sale were still there – slow global economic growth, for example, but according to analysts, we have reasons to the December sell offs are very few.
Going back from 1950 to the present, in only four cases did markets generate a negative return in December. However, history is not always the best guide. This time the markets have enough arguments to continue rising until the end of the year.
About 75% of the shares in the S & P500 are moving up. Last year, they were less than 50%. And the stocks that are lagging this year are catching up with their major indices, which suggests that investor optimism is back for the overall economic climate. Small-cap, Russell 2000 is also recovering, up 4.3% this month, outpacing the SPX by 3.5%. Cyclical stocks in the banking and industrial sectors also surpassed SPX this month.
Analysts believe markets are “in good hands” and believe they will end up in positive territory by the last day on the calendar.
Source: The Wall Street Journal
Trader Martin Nikolov