5 Historical Patterns Suggesting Bullish Momentum Will Continue in December

investing.com:

November 2023 was a remarkable month for capital markets around the world. Here's a snapshot of the notable performances across various asset classes:

Looking ahead to December, the Federal Reserve is expected to keep the interest rate stable on December 13, with expectations of a subsequent rate cut in May. Market sentiments have already factored in this likelihood, making Powell's subsequent statements crucial.

As a bullish November concludes for markets, let's take a look at 5 patterns that are set to play out, potentially leading to a consecutive bullish month in the form of December.

Historical patterns often provide valuable insights, having proven effective over numerous years. While they don't guarantee accuracy, these patterns, developed through extensive historical observation, are worth watching out for.

Since 1950, when the S&P 500 records a monthly gain exceeding +8%, the subsequent months tend to be positive. The averages are intriguing:

Following a three-month decline in August, September, and October, historical patterns indicate a robust performance in November, typically averaging +3.7%. In the current instance, this pattern has not only held but has nearly tripled those anticipated gains.

Following this pattern, December tends to rise an average of +0.8%-1%, with an average increase of +4.5% in the first two months of the following year (2024).

Since 1926, December has yielded positive returns for the S&P 500 78% of the time, with an average return of +1.6%. Notably, the stronger gains typically occur in the last third of the month, particularly in years preceding elections. Additionally, mid-December tends to mark the point where small-cap stocks outperform larger counterparts.

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