The chart below first appeared in our November 28th Keys To This Week report, and again in our December 6th Global Seasonal Analysis report (access requires subscription). Asbury Research subscribers can view these reports by visiting our website and logging into the Research Center.
From our November 28th and December 6th reports:
S&P 500 Weekly Seasonal Pattern During Q4 Since 1957
The chart shows that, on average since 1957, the last week of November is the 2nd seasonally strongest of the entire 4th Quarter, the second weak of December is the 2nd seasonally weakest of the quarter, and that more seasonal strength emerges during the final two weeks of the year.
This year, the S&P 500 (SPX) set a near term peak on December 5th at 1267, which was within just 3 business days of the last week of November (the 2nd strongest week of the quarter as shown on the chart). SPX then declined by 65 points or -5% into the December 19th low at 1202, which was within just one business day of the 2nd week of December (the 2nd weakest week of the quarter), before rebounding by 67 points or +6% into the December 27th high (this week, the 4th strongest of the quarter).
Mark Twain said that “history doesn’t always repeat, but if often rhymes”.
Frankly, all by itself, seasonality is a tertiary market factor for us. However, when seasonality corroborates the directional implications of more important market indicators like volatility, investor sentiment, relative performance, market breadth and inter-marlet relationships — as it did this year — it often provides us with a pretty accurate week-by-week road map of upcoming market direction.
Our newly-updated seasonality charts for Q1 2012 will be made available to Asbury Research subscribers in early January. Look for them in our upcoming January 3rd Keys To This Week report and January Global Seasonal Analysis report.
Best Wishes to our clients and blog readers for a healthy, happy and prosperous 2012.