A favorable seasonal window for index traders

Jay Kaeppel

2024-11-20

The stock market is entering a little-known, generally favorable short-term seasonal period. This may have implications for short-term traders, investors sitting on cash, and those thinking about lightening up on their stock holdings. We detail the history and the potential implications herein.

Key points

The fourth quarter tends to be favorable for the stock market
Specific periods within the fourth quarter have shown to be pretty consistent
One such period includes the late November/early December period

Defining the period

The period we will consider here encompasses the following:

The last six trading days of November
The first three trading days of December

For 2024, this period extends from the close on 2024-11-20 through 2024-12-04.

Measuring historical results

The chart below displays the hypothetical growth of $1 invested in the S&P 500 Index only during this nine-trading day period every year starting in 1942.

The chart below displays the same results on a logarithmic scale.

The table below displays year-by-year results.

The table below summarizes S&P 500 performance during this nine-trading day period.

What the research tells us…

The good news is that the S&P 500 has tended to perform well during the late November/early December period. The bad news is that there is no guarantee that things will follow suit in 2024. In any event, aggressive short-term traders should consider giving the bullish case the benefit of the doubt (with reasonable risk management measures in place, of course). Investors with cash to invest might consider doing so sooner rather than later, while investors looking to lighten up on their stock holdings might consider waiting a little longer.

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