The Seasonal Rally from October to Year-End in the S&P 500

One of the most well-known seasonal trends in the S&P 500 is the rally that often begins in October and runs through the end of the year. This pattern, driven by several factors such as improving market sentiment, institutional repositioning, and the "Santa Claus Rally," has historically provided strong returns for investors.

October is often seen as a turning point, recovering from the volatility of September. From this point, market confidence tends to grow, leading into the November-December period, where the year-end rally typically gains momentum.

Seasonal Analysis & Backtest

How strong has the seasonal phase been up to the end of the year in the last 40 years?

The hit rate was 80% and the average gain was 4.68% (median 5.77%).

The backtest shows the outliers. 1987 and 2018 were negative years and 1198 performed particularly well.

Election Years - Seasonal Analysis & Backtest

In the last 10 election years, the hit rate was only 60% with an average gain of 2.79% (median 3.16%).

The backtest shows that 2000 was a very negative year and not a particularly positive one.

Major Indices - Seasonal Overview

Here is a seasonal comparison of the indices. Period again 9-Oct to 30-December.

We are excited to see how this year goes.

To capitalize on this rally, it's crucial to analyze historical trends and run backtests, ensuring that your strategy is aligned with the patterns that have shown consistency over time. Tools like the ones available at Seasonality.ai can help you fine-tune these approaches by offering in-depth backtesting, probability analysis, and historical comparisons.

If you have any questions or suggestions, please do not hesitate to contact us.

For more information and analysis, visit Seasonality.Ai.