The chief market strategist at Carson Group stated that the trading window for the Santa Claus rally will officially open next week, which should bring a year-end rebound for U.S. stocks.

The Santa Claus rally refers to the last five trading days of the year and the first two trading days of the new year. Historically, the stock market tends to perform positively during these seven days.

Historical data dating back to 1950 shows that the average gain for the S&P 500 is 1.3%, and the index rises 79% of the time during the trading window of the Santa Claus rally.

According to Bank of America, when using stock market data dating back to 1928, the average gain during this trading window is even higher, at 1.6%. Such a return would push U.S. stocks to all-time highs.

Although the return of U.S. stocks has been lackluster so far in December, with the S&P 500 (SPX) down 2.66% and the Dow (DJI) down 5.75%, Ryan Detrick of Carson Group expects a strong rebound in the market ahead.

There are five reasons why he remains optimistic about U.S. stocks before the end of the year.

First, December is the month during the year when the stock market is most likely to rise, with a probability of 74.3% for U.S. stocks to increase.

Secondly, December is the month during an election year when the stock market is most likely to rise, with a probability as high as 83.3%.

Then, in election years when the S&P 500 recorded double-digit gains, the stock market has never fallen in December.

Next, the Federal Reserve's December policy meeting is nearly the last major event of 2024, opening the door to a two-week period of calm. “Remember, in the absence of news, stocks tend to perform well, which is why the stock market often strengthens around the holidays,” Detrick said.

There are signs that stocks are oversold after the Dow fell for ten consecutive days, largely approaching the same oversold levels that marked the bottom of stock prices earlier this year.

“Now is not the time to stop believing in the Santa Claus rally,” Detrick said.

The article is reprinted from: Jinshi Data