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High Likelihood of a "Santa Rally" in StocksBy
Tuesday, December 16, 2014
My friend, we've just entered one of the best times to own stocks...
I'm talking about the second half of December (from the close of the market on December 15 to the December 31 close).
In the last quarter-century, stocks have gone down just four years in the second half of December. Said another way, stocks have gone up 84% of the time in the second half of December.
The average return in the second half of December is 1.8% – a pretty incredible return really, when you realize we're only talking about roughly two weeks of actual trading days.
Of the four losing years in the last 25, the biggest loss was 1.8%. Meanwhile, the biggest winner was 8.4% back in 1991. So you can get a feel for the recent history of the second half of December. Take a look at the numbers for yourself:
We are not "cherry picking" here, either. If you go back 50 years (instead of 25), the numbers hold up. Over the last 50 years, stocks were up 80% of the time. And the average gain (during those roughly two weeks) was 1.6%. As you can see above, if you pick a shorter time frame instead of a longer one, the returns are still good. The average return since 1998 was 1.8%, and stocks were up 81% of the time.
Of course, I can't guarantee that stocks will go up...
It's not even fair to say that there's an 80% chance that stocks will go up.
You can say that, 80%-plus percent of the time, stocks have gone up in the second half of December. (Between the close on December 15 and the close on December 31.)
Will that happen this year? Each year is its own year, of course... But it appears that we have history on our side here...
I think there's a high likelihood of a "Santa Rally" ahead.
Good investing,
Steve
Further Reading:
Find more of Steve's latest predictions right here:
2015 Prediction: LOWER Interest Rates Ahead
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"This bold business model could entirely disrupt the fund-management industry as we know it – for the benefit of individual investors." Market Notes"THE DEPOT" IS STILL ENJOYING A HUGE UPTREND Another month goes by... and "The Depot" tells us things are a heck of a lot stronger than the pessimists would have you believe.
Over the past few years, we've highlighted many charts that reveal an important idea: While the U.S. economy isn't booming, it can't be doing all that bad. For example, we've noted the tremendous share-price strength in super-bank Wells Fargo and American entertainment giant Disney.
But let's not forget about Home Depot (HD). Owning and maintaining a home is the American dream. "The Depot" is America's largest home-improvement chain. It sells the things we need to install new kitchens, remodel bathrooms, and build home additions. This makes Home Depot's share price an excellent gauge of what's happening in America.
As you can see from today's chart, things are "happening." Three years ago, Home Depot shares traded for less than $40. Since then, business has been good enough to send the stock more than 100% higher. Just last week, shares struck a new all-time high. If "The Depot" is doing this well, things can't be all that bad.
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