The S&P 500 (SPX) has posted a negative return in December so far, although a “Santa Rally” could still be in the cards, according to Goldman Sachs. The Santa Rally is a seven-day period spanning the last five trading days of December and the first two trading days of January, which has been positive for the index 79% of the time with an average return of 1.3% since 1950, according to Investopedia.
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“Barring any major shocks, it will be hard to fight the overwhelmingly positive seasonal period we are entering and the cleaner positioning set-up,” wrote Goldman’s trading desk team in a note to clients.
Year-End Seasonality Favors Further Gains
The team added that it doesn’t forecast a “dramatic rally,” although it believes that the market has room to run higher into the end of the year.
The last two weeks of the year have also been historically bullish for the S&P 500, as it rises 75% of the time with an average return of 1.3%, according to Citadel Securities. Scott Rubner, the firm’s Head of Equity and Equity Derivatives Strategy, added that retail investors are headed into the new year with “both conviction and balance-sheet capacity.”
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