Seasonality

You're going to hear a lot about market seasonality if you pay any attention to the investment news between now and the end of the year.  Terms such as the "Santa Claus Rally" have been coined to describe what usually happens between Thanksgiving and New Year's Eve.  I did a quick snapshot of the S&P 500 to see how markets have performed recently during this period.  I picked 2008 as a start date simply because that's the year from my perspective when the entire investment landscape changed. There would not be enough data points to reach any solid conclusions about this period if longer dated studies hadn't already confirmed the statistical upward bias to stocks during this time. 

Since 2008 stocks have been up each year, averaging by my work just a bit under 8%.  That number is skewed by a 16.30% return in 2008.  The other two years at 1.84% and 5.73% respectively average just a little under 4% for the period.

A 4% gain would imply a year end price on the S&P 500 of 1264 from Friday's 1215.65 close while an 8% gain would place us closer to many analyst's fair value target of 1310-1320.

One note of caution if we see no rally.  The year where this pattern was most recently broken was 2007 when stocks lost nearly 5% between Thanksgiving and the new year.  That of course presaged a horrible 2008. 

*Long ETFs related to the S&P 500 in client and personal accounts.