In December 2018, the S&P 500 Index went down 9.2% and had its worst performance since the Great Depression in 1931.
But is this a good indication for December 2019?
How is the overall picture compared to last year?
In 2018, there were three negative months and eight positive months prior to December. This year, the S&P 500 has had only two negative months so far – May and August.
When looking at the number of negative months in a calendar year, history tells us that a total of two negative months for the S&P 500 in one calendar year is not unusual.
From 1928-2018 it happened nine times.
Over the last 30 years, the dispersion of positive months to negative months in the S&P 500 has been more or less the same: three, four and five negative-month years are the most common.
Finally, let’s have a look at the data by using one specific filter: the year before U.S.
In the past 90 years, there were ten occurrences in which the S&P 500 had either three or four negative months in the year before the presidential election.
The only time the S&P had just two negative months in a pre-election year was 1995.
So, will December 2019 be a repeat of last year? There are plenty of bearish arguments for why it could happen—lack of a trade resolution being perhaps the most significant.
But historical patterns tell us this most likely will not be the case. Whether you’re banking on a trade deal resolution, end-of-year window dressing, or simple seasonality, don’t be surprised if markets end the year on a high note.
Alexander Voigt is the Chief Executive Officer and founder of daytradingz.com
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