A strong market run through November typically bodes well for the final month of the year, according to Ned Davis Research. “One adage that has consistently tested well is, momentum leads price,” chief U.S. strategist Ed Clissold wrote in a note to clients on Wednesday. “Big gains tend to be followed by additional gains. … The message is bullish through the end of 2024.” Citing the research firm’s technical analysis, Clissold said that in the years the S & P 500 has gained more than 20% through November, it has then climbed 76% of the time in December, scoring a median gain of 2.1%. The strategist noted that December is, on average, the market’s strongest month of the year, so returns during these years are not substantially higher than the typical December. That is partly because a positive December that follows a big up year reduces the ability to harvest much in the way of tax-loss selling, he said. “The key takeaway is that positive returns have not pulled forward gains,” Clissold said, adding that 1996 was the last year the S & P 500 declined in December after seeing a 20% gain through November. Ned Davis continues to recommend overweighting U.S. stocks, even though the S & P 500 has already exceeded the firm’s year-end target of 5,950. The broad-based index that professional investors benchmark themselves against touched an all-time high of 6,043.18 in Friday’s holiday-shortened trading session, bringing this year’s rally to 26.7%.
S&P 500 usually gains in December when it’s up 20%-plus year to date
