Fast Start Historically Good For December Stock Market Returns

Ryan Detrick

This was the best start to the month of December for the S&P 500 in five years. This got me thinking, is this a good sign or a bad sign for stocks?

Remember, I noted why a big drop on the first day of September was a bad sign for stocks and that played out well.

As I’ve noted several times over the past few days, December stock market returns are usually strong and the month of December rarely has as a big down month. Strength in December is often called the ‘Santa Claus’ rally.

Since 1950, December is the best month and has the smallest average loss when it is red.

stock market returns by month since 1950 chart

But does a 1% gain on the first trading day tell us anything? Turns out, it is actually a very good sign.

Since 1950, the average December stock market returns after the first day of the month is +1.73%. Not bad, not bad at all.

average december stock market performance after first day of month

Here’s where it gets good. After a >1% gain on the first trading day of the month, the average and median December stock market returns for the rest of the month actually get stronger!

spx market returns in december when up on first day of month

Could this be a sign Santa is coming?  It sure looks like it.

Thanks for reading.

 

Twitter: @RyanDetrick

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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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