2013 has treated investors to a wonderful meal of huge equity returns, and there may still be a fine port waiting for us at the end. To steal from the Pola and Wyle song, we are entering what is typically the most wonderful time of the year (and right on cue, Bernanke Claus handed the market a dovish communique for the holidays). December is the second strongest month over the last 10 years and has a very clear pattern of strength during the last half of the month, as you can see from the chart to the right (from Jeff deGraaf, with RenMac).
This year December played right into the typical pattern, as we saw weakness through the first two weeks of the month with the S&P 500 down 1.6%. However, with Monday and Wednesday’s strong gains, all losses have fully reversed and we saw a new closing high for the S&P 500. Based on the typical pattern, we may well see more gains into year’s end.
Copyright: gladkov / 123RF Stock Photo