Nov. 20 was the last day of the year for investors to lose sleep over, history suggests
October's 8.3% rally is a good omen for stocks
AFP/Getty Images Investors fretting over the S&P 500's lackluster performance in the early part of November can now breathe a collective sigh of relief. History is now working in favor of the market.
Data going back as far as 1950 suggest, according to one Cincinnati-based portfolio manager and strategist, that Nov. 20 — Friday, when the benchmark S&P 500 SPX, +0.38% was putting the final touches on its best weekly performance in nearly a year — is the typical date on which the benchmark bottoms before it revs up for its vaunted Santa Claus Rally.
Plus: Click for a bigger version of that chart.
Another optimistic sign is the fact that for the past 40 years or more, if the market rose more than 5% in October, November has always closed on a positive note, the Cincinnati portfolio manager, Ryan Detrick, observed. The S&P 500 rallied 8.3% last month, snapping a two-month losing streak.
Indeed, over the past 12 years, the S&P 500 has uniformly stayed positive for the final 30 trading days of the year, as Detrick detailed in a blog post.
Ryan Detrick And going back to 1950, the final 30 days of a year have produced a mean gain of 2.36%, according to Detrick, with the median slightly higher, at 2.4%. That gain is larger three-quarters of the time, he said.
Even when the S&P 500 is flat going into the final stretch, the index picks up momentum with the finish line in sight.
Technical analysis appears to be supporting the advent of a turkey-time rally and a rousing 2015 finale.
"The oversold 'buy' signal that occurred midweek supports a bullish bias ahead of the shortened Thanksgiving week. We expect the relief rally to give way to breakouts in December as momentum continues to improve globally," said Katie Stockton, chief technical strategist at BTIG, in a daily report.
The S&P 500 is up more than 0.5% in November and about 1.5% thus far in 2015. There are 27 trading days remaining in 2015, following the Friday session. The stock market will be closed next Thursday for Thanksgiving and on Dec. 25 for Christmas.
Posted by: sarah_oz@yahoo.com
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