S&P 500 Bullish Seasonality in November-December

Investing.com — Bank of America strategists noted that the S&P 500 index historically exhibits a "bullish November-December seasonality."

Historical Performance

• S&P 500 (SPX) in November:
  • Rises 62% of the time
  • Average return: 0.96%
• S&P 500 (SPX) in December:
  • Rises 74% of the time
  • Average return: 1.32%

The strategists highlighted:
– In November, the SPX is up 58% of the time with an average return of 1.14%.
– In December, it is up 83% of the time with an average return of 1.51%.

Year-End Rally Influence

The performance of the S&P 500 through October may influence its year-end rally. If the index is positive year-to-date (YTD) by October, historically it has continued to rise 79% of the time in November-December, yielding average and median returns of 4.00% and 4.27%, respectively.

This strength is particularly noteworthy in Presidential election years.

Technical Analysis

Despite last week’s drop, the SPX maintained tactical support within a bullish trend. It held its "risk management" support level between 5775-5745, only dropping to 5762. To sustain the bullish trend, the SPX should reclaim its October highs in the 5870s, targeting 5930 and a more ambitious goal of 6180 based on a bullish cup and handle pattern.

If the SPX fails to regain the October highs, there could be a risk of revisiting the breakout zone in the 5600s along with the rising 50-day moving average (MA) near 5688.

Market Sentiment

BofA reports a decline in individual investor bullishness. The difference between the American Association of Individual Investors (AAII) Bulls and AAII Bears has decreased significantly from early October, from 28.4 to 7.8.

However, while bullishness has waned, investors are not entirely bearish as indicated by the still-positive Bulls versus Bears spread.