Year End Rally Comparos

Thanks to the year-end rally, the S&P 500 recently closed a fraction below a new 4-year high.

Today’s offering from CotD compares the average year-end rally for the Dow since 1900 (see the solid blue line) to this 2005’s year-end rally (gold line).

20051202

Source: Chart of the Day

 

As the chart illustrates, the timing of this year’s rally has been fairly typical while the magnitude has been well above average. Perhaps this reflects the snapback from the deep post-Katrina sell off.

Chart of the Day notes that "going forward, if the year-end rally were to continue with a typical year-end structure, then the market should brace itself for a somewhat choppy first half of December followed by a strong finish."

Sounds pretty reasonable, although I never have much of a clue what the market might do on a day-to-day or week-to-week basis . . .

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What's been said:

Discussions found on the web:
  1. John Navin commented on Dec 5

    The phrase “going forward” is the biggest and tiredest cliche on Wall Street. Why do so many well-paid, highly educated people insist on using it?

    “Going forward” — where the hell else might we be going?

  2. Joe commented on Dec 5

    Past, present or future. That’s how we all seem to divide up time.

  3. Idaho_Spud commented on Dec 5

    And this rally is based on what huge change in fundamentals? I’m unimpressed.

  4. TonytheTiger commented on Dec 6

    With back to back narrow range days, I would expect a break out soon. hopefully down to fill those gaps, then a continuation of the trend up would suffice.

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