Aristotle once said, "To appreciate the beauty of snowflakes, one must endure the cold of winter." So, as the usa stock market approaches the end of the year, in what posture will investors be able to appreciate a magnificent snow scene?

Ryan Detrick, chief market strategist at Carson Group, wrote over the weekend that the last month of 2024 is about to arrive, and for how the usa stock market will perform in December, historical trends may tell you five things:

1. Santa Claus Rally

Detrick pointed out that you should have heard of the "Santa Claus Rally." The "Santa Claus Rally" refers to the last five trading days of each year (usually starting after Christmas) and the first two trading days of the following year. According to findings by Yale Hirsch, the author of the Stock Trader's Almanac, the usa stock market consistently performs strongly during this period. Over the past 70 years, the s&p 500 index has averaged a rise of over 1.3% during these seven trading days.

It is easy to imagine that in the coming weeks, the approach of the "Santa Claus Rally" may inspire market optimism. However, Detrick also reminded that the scope of the "Santa Claus Rally" is mainly what is seen in most years at the end of the year rebound, not covering the entire month of December, which should be distinguished.

2. Election Year Experiences

So, if we turn our focus to single months, how has the usa stock market performed historically in December? Detrick first looked at the situations in election years over the past 70 years.

According to Detrick's statistics, December is the second best performing month for the s&p 500 index in election years—only November (the election month itself) performs better. Considering this year the us stock market surged further during the election month, it seems that this situation is playing out once again. It is also worth noting that in December of election years, the s&p 500 index has an 83.3% chance of rising, making it the month in which the market is most likely to trend upwards.

③ Average performance in December

Disregarding the impact of the us election, Detrick's statistics indicate that since 1950, December remains the third best month for average performance of the s&p 500 index—only April and November rank higher.

However, the performance in December over the past decade has not been outstanding—it ranks only tenth for average roi across all months of the year, partly due to the s&p 500 index dropping by 6% in December 2022 and a substantial decline of 9% in December 2018.

④ The easiest month to rise

From a probabilistic standpoint, clearly no month is more likely to rise than December.

Detrick's statistics show that over the past 70 years, the probability of the s&p 500 index rising in December is nearly 75%. Following that is April—where the probability of a rise exceeds 71%.

⑤ Have the first 11 months set the tone for the end of the year?

What happens if the usa stock market has already risen a lot as it enters the last month of the year?

Detrick indicates that history shows the likely outcome is a further rise in the stock market until the end of the year.

Detrick's statistics reveal that in the past 10 instances when the s&p 500 index rose at least 20% in the first 11 months of the year, there were 9 cases of further increases in December, with an average increase of 2.4%.

Coincidentally, Jeff Hirsch, editor of the Stock Trader's Almanac, recently stated that Thanksgiving may mark the beginning of a strong seasonal call pattern in the usa stock market.

In a report, he wrote that he has combined these seasonal events into a strategy: buy on the Tuesday before Thanksgiving and hold until the second trading day of the new year—since 1950, the s&p 500 index has shown a positive roi of up to 79.73% from the Tuesday before Thanksgiving to the second trading day of the new year, with an average increase of 2.58%.

Editor/rice