A Look Back at Past Decade SP500 Performance in December

Dec 23, 2010: 2:31 PM CST

So far, this December is on path to be one of the best performing Decembers in market history.

Let’s take a quick summary look at the market performance in the month of December – one of the most bullish months of the year – and compare now with prior monthly returns over the past decade.

The information comes from Yahoo Finance into an Excel spreadsheet.

A quick glance shows us that – over the last decade – December has been a kind month for investors.

It often contains the popularized “Santa Claus Rally,” which is a tendency for the market to rise bullishly at the year’s end.

So far – and with a week to go in 2010 – this December has been one of the best on record, beating the 5% performance at the end of the 2001 – 2003 Bear Market.

Other Decembers (since 1950)  that surpassed the current rally include 1991 (11.19%), 1987 (7.28%), and 1971 (8.62%).

The next best performance of the decade is the end of 2004 when the market rocketed almost straight up from early November in the aftermath of the 2004 Presidential Election (it wasn’t as contentious as that of 2000).

The wost monthly performance of the decade came in 2002 in the months after the September 11th terrorist attacks.

The economy was trying recover from the earlier Tech Bubble Bursting, and then the terrorist attacks tipped the economy into a difficult period, from which it recovered in 2003/2004, sparking powerful equity rallies that followed.

I’m more of a chart person, so data and statistics go only so far.  I want to see what the table shows on a chart.

We can see the December performance in candle chart form below:

(click for full-size image)

I color-coded Decembers pinkish and then drew color arrows to clarify up and down months.

Remember, if a candle is positive, it will be open or hollow, and if a candle is negative, it will be closed or filled.

By the way, the first December you see is 1999′s 5.87% rally (not in the Excel table).

Strangely, the worst performing December above came right at the END of the 2002 Bear Market (not the beginning of either Bear Market), and the December at the end of the 2008 Bear Market was an up-month.

Perhaps not surprisingly, the BEST three recent Decembers (1999, 2003, and 2010) came during Bull Markets (or recoveries).

Let’s see what happens in the next week to end 2010 with yet another possibly top-performing December for the markets.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade


5 Responses to “A Look Back at Past Decade SP500 Performance in December”

  1. Terlyn12001 Says:

    Thanks, Corey! Have a very happy holiday season!

  2. Corey Rosenbloom, CMT Says:

    Thanks Terry!! You too!

  3. Brian Says:

    If you look at the chart for SPY, a major divergence appears to be forming. It will be interesting to see how this plays out as we roll into the New Year.

    Thank you for sharing your TA on this site Corey. Happy Holidays!

  4. Dominick Says:

    Enjoy the holiday Corey

  5. Looking Deeper Inside SP500 Breadth into Year End | Afraid to Trade.com Blog Says:

    […] The odds – at least from breadth – are stacked against a sharp push higher, but price has shown phenomenal resilience to overcome any sort of bearish signal all the way up, and December tends to be a positive month in general, as I showed in the December Comparison post. […]