Following seasonal patterns has worked fairly well this year and with December just days away it’s useful to look at the historical statistics. December has been the best month of the year since 1950. Given the oversold conditions, prospects for a Eurozone solution and generally high levels of fear, seasonal patterns could ring true into the holidays. From The Stock Traders Almanac:
◆ #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.
◆ 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 December’s rankings slip: #3 S&P and Dow, still #2 NASDAQ month.