December Seasonality – Here’s What You Need to Know

Now let’s take a quick look at December seasonality, courtesy of analysts at Bespoke Investment Group, which points out that the data shows December is typically one of the best months of the year for equities, but in recent years it has gotten off to a slow start.

In the last decade, the S&P 500 has seen a median gain of just 0.21% from the close on Dec. 1 through Dec. 15, with gains only half the time — basically a coin flip. In just the past three years it has been even weaker, the Bespoke data shows, with the S&P 500 down during this period during each of the last three years. The materials sector has been the biggest drag.

Bespoke data shows that the best performing sectors during the period have been Industrials and Health Care, which is something we saw just today. Those are the only sectors that have seen median gains of more than 1%. And these two sectors have also been the most consistent, with positive returns during this period in seven out of the last ten years.

Along with being the only sector that has seen a negative median return, the historical data shows that materials is also the only sector that hasn’t seen positive returns at least half of the time. And finally, just looking at last year, the coming two week period was notably weak for equities as the S&P 500 and nine out of 10 sectors saw drops of more than 1%.

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The table below, created by Bespoke, lists the 15 best and worst performing S&P 500 stocks over the last ten years during the period from now through Dec. 15. At the top of the list this week are shares of Nvidia Corporation (NVDA), with a median gain of 5.35%. Not far behind are shares of Pall Corporation (PLL) and First Solar, Inc. (FSLR), with median gains of 5.22% and 5.15%, respectively.

In terms of consistency, no S&P 500 stock has been up during this two-week period in each of the last ten years, but five — Blackrock, Inc. (BLK), AutoDesk, Inc. (ADSK), Seagate Technology PLC (STX), Intuit Inc. (INTU) and Consolidated Edison, Inc. (ED) have been up in nine of the last 10 years.

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And finally, on the downside, we may be entering the best time of year for the business of retailers, but it is not a great time of year for their stocks, and that is reflected in the list of worst performing stocks. Bespoke data shows the worst historically has been Best Buy Co Inc (BBY), with a median decline of 5.38% and positive returns only twice in the last ten years. Family Dollar Stores, Inc. (FDO) sees a median decline of 4.12% with positive returns only once in the last ten years. Other retailers or retail related stocks on the list include PVH Corp (PVH), The Kroger Co. (KR), L Brands Inc (LB), Kohl’s Corporation (KSS) and Macy’s, Inc. (M), according to the Bespoke data.

I use a great website called Seasonalysis to look for the best stocks historically for given periods such as seven days, 30 days, 60 days, etc. On Tuesday, I scanned its database for stocks that have at least a 3% average gain over the past five years in the coming 30 days with a standard deviation of less than 20%, are priced over $10, have a market cap over $1 billion, and trade over 500,000 shares daily.

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The top stocks were Sunoco Logistics Partners L.P. (SXL), with a perfect record over 12 years in the next 30 days, gaining an average of 7%; Unilever plc (ADR) (UL), up 14 straight years for average 4.8%; RPM International Inc. (RPM), up the past eight straight years for 5.9% average gain; Pall up eight straight years by average 7.5%; utility Sempra Energy (SRE), up 12 of the past 13 years for average 3.9% gain; and D.R. Horton, Inc. (DHI), up the past seven straight years for average 10.6% gain.

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments.

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