We find it prudent to rely on fundamentals of the economy and markets to guide us.  This mantra remains as true today as it was in the beginning.  But we also think it worthwhile to at least be aware of various cycles.  At times, these cycles become self-fulfilling prophecies. Even more powerful when the cycles provide supporting evidence to our fundamental views.  Of course, there are times when there are exceptions to the rule.  If not, everyone would simply follow the trends, eventually negating any recognizable patterns or cycles.

Turning to the Stock Trader’s Almanac to review some of the more timely and interesting cycles that some investors follow:
 

Santa Claus Rally

The last five trading days of the year and the first two trading days of the new year are known to experience gains.  In fact, since 1950, the average rally for the S&P 500 has been 1.3% over those seven days.  Some view the lack of a Santa Clause Rally as a harbinger for a tough year ahead. 

Presidential Election Cycle

Looking back since 1833, returns during pre-election years and election years have been materially higher than the first two years of a US President’s term.  There are only three exceptions since Eisenhower, when election years were negative.   Those include Reagan’s 1984, Clinton’s 2000, and 2008 under the final year of the Bush 43 administration.  Particularly interesting with 2024 being a Presidential Election year.    

January’s First Five Days

As goes the first five days of January, so goes the year.   For whatever reason, this tidbit has shown an 83% accuracy rate going back to 1950.

January Barometer

As goes January, so goes the year.  This stat has held true 83.6% of the time since 1950.  

The January Trifecta

Putting it all together.  When the market experienced a Santa Claus Rally, along with January’s First Five Days and the January Barometer being positive, Stock Trader’s Almanac shows the S&P 500 was up 90.3% of the time for the entire year!  In fact, when all three occurred, the S&P 500 was up an average of 17.5% for the calendar year, historically.

Wild statistics and fun facts!  A fundamental outlook will be shared in the new year.  For now, thought some of the market folklore might be fun to share with friends and family over the New Year celebration.   Happy New Year to you and yours!