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### Market Momentum: Will This Record Year Continue?
The financial markets are buzzing with excitement, and for good reason. As we delve deeper into the stock market’s performance this year, it seems there’s still potential for further upward movement. Investors are riding a wave of optimism, thanks in part to recent outperformance and the prevalence of historical trends that favor continued gains.
### A Bullish Outlook Post-Election
Following the surprising victory of President-elect Donald Trump earlier this month, stocks have surged to unprecedented highs. Investors on Wall Street are hopeful about the economic agenda of the incoming administration, despite concerns regarding the potential impact of looming tariffs on the market.
Mark Haefele, the CIO at UBS Global Wealth Management, has noted that while tariff threats may introduce some short-term volatility into the markets, the underlying economic conditions remain very supportive. This balance between risk and fundamental strength is crucial for investors to consider as they strategize for the remainder of the year.
### Historical Trends Boost Investor Confidence
This year, the S&P 500 has already achieved over 50 all-time closing highs, while the Dow Jones Industrial Average and the Nasdaq 100 are trailing closely behind. As strategists cast their gaze towards the horizon, many believe that the bullish sentiment could extend into the final month of the year. Michele Schneider, chief strategist at MarketGauge.com, advised investors to “stay with the momentum and stay with the trend.”
Indeed, historical trends indicate that December traditionally serves as the most opportune month for the S&P 500. According to CFRA’s Sam Stovall, December offers the highest average rate of gains, with the S&P 500’s batting average sitting impressively at nearly 40% below the average monthly volatility observed since World War II.
Another noteworthy factor is seasonal performance. The S&P MidCap 400 and SmallCap 600 indexes tend to outperform during this period, with Utilities, Industrials, Materials, and Financials sectors closely following.
### The Election Year Advantage
This year, the election has notably compounded bullish sentiment. Historically, December ranks as the second-best month for the S&P 500 during election years, boasting an average return of 1.3% since 1950, as highlighted by Ryan Detrick of Carson Group. Furthermore, a solid year-to-date performance correlates with a higher likelihood of a year-end market chase by investors. For instance, in the last decade alone, Decembers in which the S&P began the month up by more than 20% averaged an impressive 2.4% gain.
Furthermore, the potential for a Santa Claus rally — defined as the uptick in stock prices in the last five trading sessions of December combined with the first two days of the new year — adds another layer of excitement for market participants. Jeff Hirsch, editor-in-chief of Stock Trader’s Almanac, suggests a simple yet effective trading strategy: buy the Tuesday before Thanksgiving and hold until the second trading day of the New Year. Since 1950, this method has yielded a remarkable success rate of approximately 79.73%, with an average gain of 2.58%.
### Looking Forward to 2025
While expectations for next year may be a tad more tempered, many leading strategists express optimism for sustained growth. Deutsche Bank’s chief global strategist Binky Chadha has set a target of 7,000 for the S&P 500 by 2025, while other financial giants like Barclays and RBC Capital Markets affirm similar forecasts of 6,600. JPMorgan has increased its target from 4,200 to 6,500, signaling a robust belief in market resilience.
One of the significant driving forces behind these projections is the anticipated impact of the Trump administration’s market-friendly policies. Scott Sperling, co-CEO of THL Partners, remarked on the potential for considerable economic growth under new leadership, emphasizing a decreased cost of doing business and an expansive opportunity landscape for businesses.
### Conclusion: Embrace the Opportunity
In navigating the waters of stock investment, combining historical performance data, positive market momentum, and optimistic economic policy outlooks paints an encouraging picture for investors. While uncertainty remains, the overall sentiment suggests that opportunities for further gains are ripe for those willing to engage.
As members of the Extreme Investor Network, we encourage our readers to remain vigilant, capitalize on historical trends, and stay updated on market movements that could influence investment decisions heading into the new year.
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