Stock Market Outlook for December 1, 2020
Over the past two decades, the S&P 500 Index has closed higher 70% of the time in the month of December, averaging a return of 0.6%.
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*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.  As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Valero Energy Corp (NYSE:VLO) Seasonal Chart
CF Industries Holdings, Inc. (NYSE:CF) Seasonal Chart
TE Connectivity Ltd. (NYSE:TEL) Seasonal Chart
Mountain Province Mining, Inc. (TSE:MPVD.TO) Seasonal Chart
Uni-Select, Inc. (TSE:UNS.TO) Seasonal Chart
CONMED Corp. (NASD:CNMD) Seasonal Chart
Embraer Aircraft (NYSE:ERJ) Seasonal Chart
Polaris Infrastructure Inc. (TSE:PIF.TO) Seasonal Chart
Energizer Holdings, Inc. (NYSE:ENR) Seasonal Chart
Invesco Low Volatility Portfolio ETF (TSE:PLV.TO) Seasonal Chart
BMO Discount Bond Index ETF (TSE:ZDB.TO) Seasonal Chart
iShares MSCI Belgium Capped ETF (NYSE:EWK) Seasonal Chart
iShares Cohen & Steers REIT ETF (NYSE:ICF) Seasonal Chart
iShares U.S. Medical Devices ETF (NYSE:IHI) Seasonal Chart
JPMorgan Diversified Return Global Equity ETF (AMEX:JPGE) Seasonal Chart
ProShares UltraShort Bloomberg Natural Gas (NYSE:KOLD) Seasonal Chart
Invesco Dynamic Media ETF (NYSE:PBS) Seasonal Chart
Schwab U.S. REIT ETF (NYSE:SCHH) Seasonal Chart
First Trust NASDAQ Technology Dividend Index Fund (NASD:TDIV) Seasonal Chart
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The Markets
Stocks slipped in the final session of November as portfolio managers rebalanced their books ahead of the close of the month. The S&P 500 Index dipped by half of one percent, continuing to consolidate above the previous trading range that peaked above 3500. Rising support at the 20 and 50-day moving averages now hover around 3548 and 3452, respectively, presenting the downside risks to the short and intermediate-term rising trends. MACD is once again converging on its signal line the Relative Strength Index (RSI) continues to show signs of rolling over given the consolidation from recent weeks.
The action during the Monday session had all the hallmarks of mean reversion as those sectors that had performed exceptionally well in the month, such as energy and financials, were sold off in favour of the areas that suffered from rotation, such as technology and health care. The ETFs that track the technology (XLK) and health care (XLV) sectors are finding support at their rising 20-day moving averages, while the former are closing the gaps that had become extreme versus the equivalent moving averages. Positive short and intermediate-term trends for each persist.
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Looking towards the month ahead, December is typically the strongest time of the year for stocks as end of month, quarter, and year reallocations cause a drift higher in prices, particularly around the Christmas holiday in a period that has become known as the Santa Claus rally. Over the past 20 years, the S&P 500 Index has closed higher 70% of the time in this last month of the year, however, the average return has become muted in recent years. The 0.6% gain for the large-cap benchmark over the past 20 Decembers has suffered from the weight of the 9.2% decline recorded in 2018 when a selloff in stocks created a terrifying pre-Christmas period. We break down the backdrop to the market going into year-end, the drivers of market performance in this last month of the year, and how to position in our extensive monthly report for December. Subscribe now.
Just released…
Our monthly report for December has just been released, breaking down everything that you need to know for the month(s) ahead. The report is our longest one yet, coming in at 110 pages. Don’t worry, the report is broken down into sections with appropriate headings, so you can read a little or you can read it all.
Highlights in this report include:
- Equity market tendencies in the month of December
- The conclusion of the retail trade
- The risk of another economic derailment through the holiday season
- Time to monitor coincident indicators of strains in the system
- What investor sentiment is saying
- The pessimistic investor
- What the bond market is saying about the sentiment of investors
- The rise of the Copper/Gold Ratio
- The strength in shipping activity beyond its average seasonal peak
- Tracking the spread of the coronavirus
- The impact of the election cycle on the equity market in the year ahead
- Time to rotate to Canadian equities?
- Earnings expectations
- The significance of the gains in the market from the past month
- How to play the expansion of market breadth
- The technical status of the S&P 500 Index
- Positioning for the months ahead
- Sector reviews and ratings
- Notable stocks and ETFs entering their period of strength in December
Subscribe now and we’ll send you this extensive look at the state of the market and how to position for it.
Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.80.
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Seasonal charts of companies reporting earnings today:
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S&P 500 Index
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TSE Composite
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