December Seasonality – The Best Month of the Year

As always, here are some seasonal data points from the Stock Traders Almanac for the month of December.  Historically, December is the best month of the year and is especially strong for high beta names:

◆ #1 S&P (+1.6%) and #2 Dow (+1.7%) month since 1950, #2 NASDAQ (2.0%) since 1971

◆  2002 worst December since 1931, down over 6% Dow and S&P, –9.7% on NASDAQ

◆ “Free lunch” served on Wall Street before Christmas

◆ Small caps start to outperform larger caps near middle of month

◆ “Santa Claus Rally” visible in graph above and on page 110

◆ In 1998 was part of best fourth quarter since 1928

◆ Fourth quarter expiration week most bullish triple witching week, Dow up 15 of last 19

◆ In pre-presidential election years Decembers rankings slip: #3 S&P and Dow, still #2 NASDAQ month.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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