While it seems ‘ole Santa has caught a case of the Bah Humbugs, charting December to date against previous Decembers shows that the Santa Rally may just be getting started.
Let’s take a look at the S&P 500, starting in 1960, and SPY, starting in 1993, to chart the average December performance.
I’ve assumed that the $SPX and SPY was bought on the open on the first trading day of December and sold at the close on the last trading day of December.
As shown above, Santa really gets flying about halfway through December. In fact Santa rarely disappoints. We can see how true this is above.
While current December action (white line) is more volatile due to not being smoothed by the averaging process, it is easy to see that so far, the month seems to be following a typical December pattern.
Note that SPY, which represents more recent data, shows that the Santa Rally has been losing steam over the past decade or so.
December Statistics (using $SPX)
- Average Monthly Profit/Loss = 1.50%
- Winning Months= 71.15%
- Worst December = 1968 loss of -4.2%
- Best December = 1991 gain of +11.1%
Profit Distributions: (using $SPX)
Equity Curve: (using $SPX)
Let’s hope that Santa will soon be firing up his sleigh! If history is any guide, the rally should start within a few days…