Even Scrooge Would Cheer These 2 Charts

The harder the S&P 500 Index (SPX) falls in early December, the harder it rallies at the end of the month

by Andrea Kramer

Published on Dec 15, 2015 at 11:46 AM
Updated on Jun 24, 2020 at 10:16 AM

December started out anything but jolly for U.S. stocks, which have tumbled along with oil prices. While stocks and crude are on the mend this week, the S&P 500 Index (SPX) remains roughly 1.7% lower month-to-date, having just wrapped up its worst five-day stretch since August. But have no fear -- history suggests the S&P tends to turn its early December lumps of coal into big, shiny diamonds.

In fact, the SPX has enjoyed a positive second half of December (12/15 - 12/31) for eight straight years. The last time the SPX was down in the second half was in 2006, when it lost 0.62% in that two-week stretch, per Schaeffer's Senior Quantitative Analyst Rocky White. 

The bullish end-of-month skew remains evident going back 50 years: the SPX has been positive in the first half of the month just 54% of the time, compared to 80% of the time during the second half of December. What's more, the index has averaged a first-half loss of 0.1%, compared to a second-half gain of 1.6%.

As alluded to earlier, it seems the harder the S&P falls in the first two weeks of the month, the harder it rallies in the last two weeks. The index has been down by 1% or more in the first half of December on 17 occasions during the past half-century. Following these instances, the SPX has come back with a vengeance, with a positive second-half finish 88% of the time, and an average gain of 2.5%.

151215SPX50


And if you're still not buckled up, just take a look at the S&P's typical December path over the past 50 years:

151215SPXDecember




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